Return on Investment (ROI) is a crucial metric for evaluating the profitability of stock investments. Our user-friendly calculator allows you to quickly and easily determine the ROI of your investment.

Simply input your initial investment, final value, optional dividends received, and the investment period. Our tool will then calculate the total return, ROI, and annualized ROI, providing you with a comprehensive overview of your investment’s performance.

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.

How to Calculate ROI for Stocks: A Step-by-Step Guide

Return on Investment (ROI) is a key indicator for assessing the profitability of stock investments. This guide will walk you through how to calculate ROI for your stock holdings.

Basic ROI Formula

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

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

Annualized ROI

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

Practical Example

Let’s assume you made the following investment:

  • Purchase price: $1,000
  • Selling price after 3 years: $1,300
  • Dividends received over 3 years: $90
Calculating ROI:
\(\begin{aligned}
ROI &= \frac{($1,300 – $1,000) + $90}{$1,000} \times 100\% \\
&= \frac{$390}{$1,000} \times 100\% \\
&= 39\%
\end{aligned}\)

Calculating Annualized ROI:
\(\begin{aligned}
\text{Annualized ROI} &= \left(\left(1 + \frac{39}{100}\right)^{\frac{1}{3}} – 1\right) \times 100\% \\
&\approx 11.6\%
\end{aligned}\)

Interpretation: Your investment yielded a total return of 39% over the entire period. When annualized, this translates to an average annual return of 11.6%.

Conclusion

Calculating ROI helps you evaluate the performance of your stock investments and compare different investments. However, keep in mind that ROI alone doesn’t capture all aspects of an investment. Factors such as risk, liquidity, and future growth potential should also be considered in your investment decisions.

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