Enter the final value of the investment, the initial value of the investment, and the total number of years into the calculator to determine the personal rate of return. This calculator can also evaluate any of the variables given the others are known.

Personal Rate Of Return Formula

The following formula is used to calculate the personal rate of return. 

R = ((Vf / Vi)^{(1 / n)}) - 1

Variables:

  • R is the personal rate of return (decimal)
  • Vf is the final value of the investment ($)
  • Vi is the initial value of the investment ($)
  • n is the total number of years

To calculate the personal rate of return, divide the final value of the investment by the initial value of the investment. Then, raise the result to the power of the reciprocal of the total number of years. Subtract 1 from the result to get the personal rate of return.

What is a Personal Rate Of Return?

A Personal Rate of Return is a measure of the performance of an individual's investment portfolio over a specific period of time. It takes into account all the cash flows, such as contributions, withdrawals, and changes in investment value, to calculate the annualized rate of return. This rate can be used to compare the performance of different investments or to assess the effectiveness of an investment strategy.

How to Calculate Personal Rate Of Return?

The following steps outline how to calculate the Personal Rate of Return.

  1. First, determine the final value of the investment (Vf) ($).
  2. Next, determine the initial value of the investment (Vi) ($).
  3. Next, determine the total number of years (n).
  4. Next, use the formula R = ((Vf / Vi)^(1 / n)) - 1 to calculate the Personal Rate of Return.
  5. Finally, check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge.

Final value of the investment (Vf) ($) = 5000

Initial value of the investment (Vi) ($) = 3000

Total number of years (n) = 5