Formulas and sources
Each formula this calculator uses, where it comes from, and what it leaves out. "How it works" shows the same formula with your own numbers.
Return on investment
Simple and Annualized modes
- ROI
- return on investment, as a percentage
- R
- amount returned: everything you got back, including income and the original amount
- I
- amount invested: the total cost, fees included
Net profit, shown beside it, is R - I.
Source: Uses the formula in FINRA's "Calculating Your Investment Returns" [1]. Its worked example, $2,020 invested and $2,540 back, gives about $520 or 25.7%; this tool gives $520.00 and 25.74%.
Annualized ROI
Annualized mode, for a hold of one year or more
- Annualized ROI
- the yearly rate that compounds to the same total, shown as a percentage
- R
- amount returned
- I
- amount invested
- Years
- the hold in years: months ÷ 12, days ÷ 365
A hold shorter than one year shows "Not annualized" instead of a rate. FINRA's example over 3 years gives 7.92% from its rounded 25.7% (its text prints 7.792, a typo for the formula image's 0.0792); unrounded, the same inputs give 7.93% here.
Source: Uses the formula in FINRA's guide [1], where 1 + total return = R ÷ I. Holds under one year are not annualized, the same cut-off GIPS 2020 sets for the returns firms report, provision 2.A.12 [2].
Reading bands
Annualized mode
- Loss
- below 0%
- Conservative
- 0% to 7%
- Target
- 7% to 15%
- High Growth
- 15% or more
The band is read from the annualized ROI as shown, to two decimals, and an edge belongs to the higher band: 6.996% shows as 7.00% and reads Target.
Source: CalcTrail's own bands for reading the figure; no publisher. They are not a benchmark for any asset; FINRA's guide says to compare like with like [1].
Sources
- Financial Industry Regulatory Authority (FINRA). Calculating Your Investment Returns, sections "Calculating Return on Investment" and "Calculating Annualized Returns". December 4, 2024.
- CFA Institute. Global Investment Performance Standards (GIPS) for Firms, provision 2.A.12. 2020 edition.
What this calculator does not cover
- Taxes, inflation and risk are not modeled. Fees and income count only if you add them to the two amounts, as FINRA's example does.
- It takes one amount in and one amount out, so deposits or withdrawals during the hold are not followed.
- Years are counted as months ÷ 12 or days ÷ 365, not by an actual-day calendar.
Sources checked on .