What's the difference between total return and annualized return?
Total return is the overall percentage gain/loss. Annualized return is the average yearly rate, allowing fair comparison of investments held for different time periods.
Calculator
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Analysis
Interpretation of the current calculator output
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How to Use
Step-by-step instructions
- 1Enter the purchase price per share
- 2Input the current (or sale) price per share
- 3Specify the number of shares owned
- 4Add the holding period in years
- 5Review total return, profit/loss, and annualized performance
Stock Return Calculations
Stock returns measure the percentage gain or loss from an investment. Annualized returns account for the time period to provide a standardized comparison metric.
Total Return = (Current Value - Initial Investment) ÷ Initial Investment × 100%
Annualized Return = [(Current Value ÷ Initial Investment)^(1/Years) - 1] × 100%Variables:
Current ValueCurrent price × number of sharesInitial InvestmentPurchase price × number of sharesTotal ReturnOverall percentage gain or lossAnnualized ReturnAverage yearly return rateExample
Stock Investment Example
Inputs:
Purchase Price:$100 per share
Current Price:$120 per share
Shares Owned:100 shares
Holding Period:1 year
Steps:
- 1.Total Investment = $100 × 100 = $10,000
- 2.Current Value = $120 × 100 = $12,000
- 3.Total Gain = $12,000 - $10,000 = $2,000
- 4.Total Return = ($2,000 ÷ $10,000) × 100 = 20%
- 5.Annualized Return = [($12,000 ÷ $10,000)^(1/1) - 1] × 100 = 20%
Result:
$2,000 profit with 20% return over 1 year
Frequently Asked Questions
Should I include dividends in my return calculation?
Yes! Total return should include dividends reinvested or received. This calculator focuses on capital gains; add dividend income separately for complete return.
How do taxes affect my returns?
Short-term gains (<1 year) are taxed as ordinary income. Long-term gains (>1 year) get preferential tax rates: 0%, 15%, or 20% based on income. Calculate after-tax returns for accurate comparison.