When you add or withdraw money along the way, simply comparing start and end values gives the wrong answer. This calculator finds the money-weighted rate of return that accounts for every cash flow.
How to use the Rate of Return Calculator
- Initial investment
- Final amount received
- Investment length
- Periodic deposit or withdrawal
- Cash flow frequency
- Timing
- Compounding frequency
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the initial investment, the final amount, the investment length, any regular deposit (negative for withdrawals) with its frequency and timing, and the compounding.
Tips
- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.
Common mistakes to avoid
- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).
Inputs explained
| Field | What to enter |
|---|---|
| Initial investment | Amount in your currency |
| Final amount received | Amount in your currency |
| Investment length | Units: years, months |
| Periodic deposit or withdrawal | Amount in your currency |
| Cash flow frequency | Choose one: Monthly, Bi-weekly, Weekly, Quarterly … |
| Timing | Choose one: End of each period, Beginning of each period |
| Compounding frequency | Choose one: Yearly, Semi-annually, Quarterly, Monthly … |
What each result means
- Rate per cash-flow period = rate(round([Investment length]×[Cash flow frequency]), 0 – [Periodic deposit or withdrawal], 0 – [Initial investment], [Final amount received], [Timing])×100
- Effective annual rate of return = ((1 + [Rate per cash-flow period]÷100)^[Cash flow frequency] – 1)×100
- Nominal rate (chosen compounding) = nomr([Effective annual rate of return]÷100, [Compounding frequency])×100
- Total deposited = [Initial investment] + [Periodic deposit or withdrawal]×round([Investment length]×[Cash flow frequency])
Example values
How the main result changes when Initial investment changes and everything else stays at the example values above:
| Initial investment | Effective annual rate of return (%) |
|---|---|
| 5,000 | 11.149 |
| 7,500 | 7.899 |
| 10,000 | 5.5 |
| 12,500 | 3.604 |
| 15,000 | 2.04 |
| 20,000 | -0.444 |
Formula
Solve initial × (1 + i)^N + payment × [(1 + i)^N − 1] ÷ i × (1 + i × timing) = final for iAnnual rate = nominal rate for the chosen compoundingWorked example
Inputs — Initial investment: $10,000; Final amount received: $25,000; Investment length: 10 years; Periodic deposit or withdrawal: $50; Cash flow frequency: Monthly; Timing: End of each period; Compounding frequency: Yearly.
Results — Rate per cash-flow period = 0.4472 %; Effective annual rate of return = 5.5 %; Nominal rate (chosen compounding) = 5.5 %; Total deposited = $16,000.00.
Frequently asked questions
How do I calculate rate of return with deposits?
Solve for the rate that grows all cash flows to the final value – this calculator does it.
What is the difference between ROR and ROI?
ROI is a total percentage; rate of return is usually annualized.
Can the rate be negative?
Yes, if the final value is less than what you put in.
What formula does the Rate of Return Calculator use?
Solve initial × (1 + i)^N + payment × [(1 + i)^N − 1] ÷ i × (1 + i × timing) = final for i.