# How to Calculate the Rate of Return With a Formula

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The rate of return is a simple and effective way to measure how well an investment, such as stocks, mutual funds or real estate, has performed over a specified period. However, especially with volatile investments, past performance does not guarantee future results.

### Things You'll Need

• Calculator
• Subtract the value of the investment at the beginning of the specified period from the value of the investment at the end of the specified period. For example, if you want to figure the rate of return on your mutual fund investment for the previous year and it was worth \$22,000 at the start of the year and \$25,000 at the end of the year, you would subtract \$22,000 from \$25,000 to find you had a profit of \$3,000.

• Divide the profit or loss by the original value of the investment to find the rate of return expressed as a decimal. Here, you would divide your profit of \$3,000 by the original value of \$22,000 to get 0.1364.

• Multiply the rate of return expressed as a decimal by 100 to find the rate of return expressed as a percentage. Completing this example, you would multiply 0.1364 by 100 to get a 13.64 percent rate of return.

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