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Investment Rate of Return Calculator — How to Measure Your Returns

How to calculate your investment rate of return, what a good return looks like, and how to use an investment calculator to project future growth. Includes worked examples.

Your investment rate of return tells you how much your money has grown (or shrunk) as a percentage of what you originally invested. A simple rate of return is calculated as: (final value − initial value) ÷ initial value × 100. For example, investing £10,000 that grows to £13,500 gives you a 35% total return.

Try it yourself with our Investment Return Calculator to project how your portfolio could grow over time.

Worked Example

Scenario: You invest £10,000 with an average annual return of 7% for 20 years, reinvesting all gains.

  • Starting amount: £10,000
  • Annual return: 7%
  • Time period: 20 years
  • No additional contributions

Final value: £38,697

That is a total return of 287% — your money has nearly quadrupled. The power here is compound growth: your returns themselves generate further returns each year.

If you added £200 per month on top of the initial £10,000:

Final value: £142,810

The £58,000 you contributed in total (£10,000 + £48,000 in monthly additions) has grown into over £142,000.

What Is a Good Rate of Return?

Historical averages vary by asset class:

Asset classTypical long-term annual return
UK equities (FTSE All-Share)7–8% nominal
Global equities (MSCI World)8–10% nominal
UK government bonds3–5% nominal
Cash savings (UK)1–4% nominal
Property (UK residential)5–7% nominal

Nominal returns do not account for inflation. To get the real return, subtract inflation (typically 2–3% per year in the UK historically).

Simple vs Compound Return

  • Simple return counts only gains on your original investment
  • Compound return (CAGR) accounts for the reinvestment of gains each year

For long-term investing, CAGR is the more meaningful measure. A total return of 100% over 10 years is a CAGR of approximately 7.2% — not 10%.

Use our Compound Interest Calculator to see how compounding accelerates growth over different time periods.

Why Time in the Market Matters

The longer you stay invested, the more compounding works in your favour and the more time you have to recover from downturns. Missing just the 10 best days in the stock market over a 20-year period can cut your total return by more than half.