“… Personal Capital is the tool to beat.”
As of 2019
Investment Return Calculator
Are you on track to meet your long-term investment goals? See how your portfolio is doing by calculating your estimated return rate. Then, download our free tools to see a complete view of your finances.
Get Started
1
Free Dashboard
Link your accounts and track your entire net worth.
2
Free Analysis
Work with an advisor to build a free Personalized Plan that’s yours to keep.
3
Personalized Advice
Get Wealth Management custom-tailored to your unique situation.
What is investing?
Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit. Investing can also generate passive income. For example, some companies pay dividends to shareholders, which is their way of passing along profits to the company’s owners. Similarly, you can invest in assets, such as purchasing real estate, or in endeavors like starting a business.
Types of investments
Here are the most common investment types at a glance.
Stock
Companies sell stocks — also known as equities — to raise capital. When you buy a share of stock, you’re actually buying a stake of ownership in the company that issued it.
Bonds
When you invest in bonds, you’re essentially lending the issuing entity money. The issuer makes interest payments on the bonds and then pays back their full value when they reach maturity.
Mutual funds
A mutual fund is a pool of money from investors that’s then invested in many different securities. When you invest in the mutual fund, you own a very small part of each security within the fund. Mutual funds can invest in many different types of assets, including stocks, bonds, and commodities.
Exchange-traded funds
ETFs are similar to mutual funds, except that ETFs trade like stocks. That means you can buy and sell shares throughout the day, which is not the case with mutual funds.
Certificates of deposit
A certificate of deposit (or CD) is a type of low-risk investment available at many banks and credit unions. You agree to leave your money in the CD for a certain amount of time. In exchange, the bank pays you a certain interest rate.
Real estate
There are many ways to invest in real estate, including buying properties to rent out or renovate and sell for a profit. You can also invest in real estate passively through a real estate investment trust, which gives you shares in a company that invests in real estate.
Commodities
A commodity is a physical product with financial value. Common commodities include gold, agricultural products, and crude oil. Most people who invest in commodities do so with futures contracts, which is when you speculate about the future price of the asset.
Cryptocurrency
This relatively new type of investment is a digital currency that fluctuates in value. While they are designed to be a type of currency that you can use to buy goods and services, the Securities and Exchange Commission is still looking into how to regulate it as an investment.
What is a return on investment?
Return on investment (ROI) is an approximate measure of an investment's profitability. It has a wide range of applications; it can be used to measure the profitability of a stock investment, when deciding whether or not to invest in the purchase of a business, or evaluate the results of a real estate transaction.
How do I calculate my return on investment?
ROI is calculated by subtracting the initial value of the investment from the final value of the investment (which equals the net return), then dividing this new number (the net return) by the cost of the investment, and, finally, multiplying it by 100.
What is your rate of return over time?
The goal of any investment is to get more cash out than you put in. How much could you potentially make over time? The actual rate of return is largely dependent on the types of investments you select. As time goes on your investment interest goes up but you will all need to take into account inflation. It’s important to note that your investments won’t always grow.
There have been months where the stock market sees negative growth. But according to the Securities and Exchange Commission, the stock market has an average annual return of 10% (closer to 6% or 7% “real” returns when you subtract for the effects of inflation) over long-term periods of time, even when you account for the bad years. The riskier the investment, such as stocks, usually the higher return.
Be sure to use our calculator above to get an overall estimate.
How can you make investing part of your plan?
The fact is that most of us won’t be able to retire comfortably without investing. Here’s how you make investing a part of your overall financial plan:
Assess where you are now. It’s important that before you make any big money moves, you take inventory of where you are now.
Secure your financial safety net. Make sure that before you increase your investing efforts, you have an emergency fund in place.
Define your long-term goals. At what age do you want to retire? How much do you want to spend per year during retirement? Using these factors, you can use likely investment returns to figure out how much you’d need to invest per month to reach your goal.
Identify the right investments for you. As we discussed earlier, there are plenty of options, including stocks, bonds, and mutual funds. Remember to diversify your portfolio and choose assets that match your risk tolerance.
Revisit your investments. Remember that your financial goals and risk tolerance may change over time, and it’s important to revisit your portfolio to ensure it still lines up with your goals.
Disclosure
The content is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Download The App
Personal Capital Advisors Corporation ("PCAC") compensates ("Company") for new leads. ("Company") is not an investment client of PCAC.
["Author"] has entered into an agreement with Personal Capital Corporation ("Personal Capital"), through which Author will be paid up to $200 for each person who uses webpage to register with Personal Capital and links at least $100,000 in investable assets to Personal Capital's Free Financial Dashboard. The “Author”, due to such compensation, has an incentive to recommend Personal Capital, resulting in a material conflict of interest. Author is not affiliated with Personal Capital and Author's services consist solely of referrals of prospective clients. As a result of this arrangement Author may financially benefit from referring qualified leads to Personal Capital. No fees or other amounts will be charged to investors by Author or Personal Capital as a result of the arrangement. Investors that are referred by Author to Personal Capital and subscribe for investment advisory services provided by Personal Capital’s subsidiary, Personal Capital Advisors Corporation (“PCAC”), will not pay increased management fees or other similar compensation to Author, Personal Capital or PCAC as a result of the arrangement. This agreement with Author does not imply a sponsorship, endorsement, approval, investigation, verification, or monitoring by PCAC of the contents of the Author's website. Personal Capital is not responsible for the content of any website owned by a third party that may be linked to Personal Capital's website regardless of whether the link is provided by PCAC or a third party. Personal Capital does not prepare or maintain, has not and will not review or update, and does not guarantee the accuracy, timeliness, completeness, suitability, reliability, or usefulness of any information contained on a linked third-party website.
Advisory services are offered for a fee by PCAC, a wholly owned subsidiary of PCC, an Empower company. PCAC is a registered investment adviser with the Securities Exchange Commission ("SEC"). SEC registration does not imply a certain level of skill or training. Past performance is not a guarantee of future return. Investing involves risk. Personal Capital and the Personal Capital logo are trademarks of PCC. All other trademarks, trade names, or service marks used or mentioned belong to their respective owners.