Invesight

Return Calculator

Calculate trading returns and realized P&L

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What is Rate of Return?

Rate of return is the net gain or loss of an investment over a specified period, expressed as a percentage of the initial cost: R=Vf−ViVi×100%R = \frac{V_f - V_i}{V_i} \times 100\% where Vf is the final value and Vi is the initial value. (Source: Wikipedia, Rate of return)

To calculate realized returns accurately, you must account for transaction costs and taxes. These include brokerage commissions (typically $0-$10 per trade or 0.01%-0.5% of trade value), capital gains taxes, and other applicable fees that vary by country and account type.

It's important to distinguish between gross return and net return. Gross return is the profit before deducting fees and taxes. Net return is the actual profit after all costs. Frequent trading can significantly reduce net returns due to accumulated transaction costs.

Returns should be interpreted in the context of the holding period. A 30% return over 1 year is very different from 30% over 5 years. For comparing long-term investment performance, use the Compound Annual Growth Rate (CAGR), which annualizes the total return.

FAQ

How do you calculate stock return?
Basic formula: R=Vf−ViVi×100R = \frac{V_f - V_i}{V_i} \times 100 For example, buying at $50 and selling at $65: 65−5050×100=30%\frac{65 - 50}{50} \times 100 = 30\% Subtract commissions and taxes for the actual net return.
How do trading fees affect returns?
Trading fees include brokerage commissions (charged on both buy and sell) and taxes (capital gains tax, transaction tax). Even small fees compound over multiple trades. A 0.1% round-trip fee on monthly trades equals 1.2% annually — significant for small gains.
What is the difference between gross and net return?
Gross return is the raw profit from price change. Net return subtracts all costs: buy commission, sell commission, and applicable taxes. Always evaluate investment performance using net return, as gross return overstates actual earnings.
Do I pay taxes on stock losses?
In many jurisdictions, transaction taxes (like stamp duty or securities transaction tax) apply regardless of profit or loss. Capital gains tax only applies to profits. In some countries, capital losses can be used to offset gains for tax purposes (tax-loss harvesting).