Understanding Return on Investment (ROI) is essential for evaluating how profitable your stock investments are. Our intuitive calculator helps you quickly assess the ROI of your investments with ease.

Just enter your initial investment amount, the final value, any dividends received, and the duration of the investment. Our tool will calculate the total return, ROI, and annualized ROI, giving you a complete picture of how your investment has performed.

ROI Calculator for Stock Investments

ⓘ Enter the amount you initially invested.
ⓘ Enter the value of your investment at the end of the period.
ⓘ Enter the sum of all received dividends (optional).
ⓘ Enter the duration of your investment in years.

Calculating ROI for Your Stock Investments: A Step-by-Step Guide

ROI is a vital measure for determining the profitability of your stock investments. This guide will take you through the process of calculating ROI for your stocks.

Basic ROI Formula

The basic formula for ROI is:
\(ROI = \frac{\text{Profit}}{\text{Invested Capital}} \times 100\%\)

For stock investments, both capital gains and dividends are considered:
\(ROI = \frac{(\text{Selling Price} – \text{Purchase Price}) + \text{Dividends Received}}{\text{Purchase Price}} \times 100\%\)

Calculating Annualized ROI

To compare the performance of investments over various time periods, annualized ROI is often used:
\(\text{Annualized ROI} = \left(\left(1 + \frac{ROI}{100}\right)^{\frac{1}{\text{Number of Years}}} – 1\right) \times 100\%\)

Example Calculation

Suppose you made the following investment:

  • Initial investment: $2,000
  • Selling price after 4 years: $2,800
  • Dividends received over 4 years: $120
Calculating ROI:
\(\begin{aligned}
ROI &= \frac{($2,800 – $2,000) + $120}{$2,000} \times 100\% \\
&= \frac{$920}{$2,000} \times 100\% \\
&= 46\%
\end{aligned}\)

Calculating Annualized ROI:
\(\begin{aligned}
\text{Annualized ROI} &= \left(\left(1 + \frac{46}{100}\right)^{\frac{1}{4}} – 1\right) \times 100\% \\
&\approx 9.7\%
\end{aligned}\)

Interpretation: Your investment achieved a total return of 46% over the 4-year period. On an annual basis, this equates to an average return of about 9.7%.

Additional Insights: Factors Affecting Investment Returns

While calculating ROI provides valuable insights, remember that it doesn’t account for all investment aspects. Factors such as market volatility, economic conditions, and the specific risk profile of your investments can significantly influence returns.

Conclusion

ROI calculations are essential for evaluating your stock investments and comparing different options. However, it’s crucial to consider additional factors like risk, liquidity, and potential for future growth when making investment decisions.

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