Enter Values

$
Initial investment amount
$
Final investment value
$
Dividends, interest, or other income (optional)
years
Enter to see annualized return (e.g., 0.5 for 6 months)
Ryan O'Connell, CFA
Calculator by Ryan O'Connell, CFA

Quick Reference

  • HPR = Total return over the holding period
  • Include dividends for true total return
  • Positive HPR = Investment gained value
  • Add holding period to see annualized return

Holding Period Return Result

Holding Period Return 17.00% Good
Dollar Return $1,700.00
Loss Moderate Excellent

Formula Breakdown

HPR = (P1 - P0 + D) / P0
= ($11,500 - $10,000 + $200) / $10,000
= $1,700 / $10,000
= 17.00%

Interpretation

Your investment returned 17.00% over the holding period. This is considered a good return.

Rating Guide

< -20% Severe Loss Major capital loss
-20% to < 0% Loss Negative return period
0% to < 5% Low Below inflation/risk-free
5% to < 10% Moderate Reasonable return
10% to < 20% Good Strong performance
>= 20% Excellent Exceptional return

Understanding Holding Period Return

What is Holding Period Return?

Holding Period Return (HPR) measures the total return earned on an investment over the entire time it was held. Unlike other metrics that focus on specific time periods, HPR captures the complete picture: price appreciation plus any income received (dividends, interest, distributions).

In simple terms, HPR answers: "What was my total return from the day I bought to the day I sold?"

Key Insight: HPR includes all forms of return. If you earned $500 in dividends and your stock price went up $1,200, both contribute to your total return. Missing either component gives an incomplete picture.

How to Use HPR

The holding period return is particularly useful for:

  • Evaluating investments: Compare your actual total return to expectations or benchmarks
  • Tax planning: Understand your gain/loss before selling
  • Performance tracking: Monitor how investments have performed over time
  • Comparing strategies: Which approach generated better total returns?

HPR vs. Annualized Return

HPR shows your total return regardless of time (e.g., "I made 50% over 3 years"). However, comparing a 3-year investment to a 1-year investment is difficult with HPR alone.

Annualized return solves this by converting any HPR to an equivalent yearly rate. A 50% return over 3 years equals about 14.5% per year. This makes comparison straightforward.

Important: Enter a holding period above to see your annualized return. This is essential when comparing investments held for different lengths of time.

Limitations

  • Time-blind: A 20% return could be great (1 year) or terrible (10 years)
  • Ignores risk: Doesn't tell you how volatile the journey was
  • Single period: Multiple contributions/withdrawals need modified methods
  • No compounding detail: Doesn't show how returns grew over time

For investments with multiple cash flows at different times, consider using Money-Weighted Return (IRR) or Time-Weighted Return instead.

Frequently Asked Questions

Holding period return (HPR) measures the total return on an investment over the entire period it was held. It includes price appreciation plus any income received (like dividends), divided by the initial investment value. It's the most comprehensive single measure of investment performance.

HPR = (Ending Value - Beginning Value + Cash Flows) / Beginning Value. For example, if you bought stock for $10,000, sold for $11,500, and received $200 in dividends, HPR = ($11,500 - $10,000 + $200) / $10,000 = 17%.

Yes, a complete HPR calculation includes all cash flows received during the holding period, such as dividends, interest payments, or other distributions. Enter these in the "Cash Flows Received" field to get your true total return.

What constitutes a "good" HPR depends heavily on the time period. The S&P 500 historically returns about 10% annually. For a 1-year investment, 10-20% is generally considered good. For 5 years, a total HPR of 50-75% would be in that range. Always consider the time period when evaluating HPR.

HPR shows the total return over the entire period (e.g., 50% over 3 years), while annualized return converts this to an equivalent yearly rate (e.g., 14.5% per year). Use HPR to see your actual gain; use annualized return to compare investments held for different lengths of time.

Yes, HPR can be negative if your ending value plus cash flows is less than your beginning value. A negative HPR indicates a loss on the investment. For example, if you invested $10,000 and it's now worth $8,000 with $500 in dividends, your HPR is ($8,000 - $10,000 + $500) / $10,000 = -15%.
Disclaimer

This calculator is for educational and informational purposes only. Holding period return is a historical measure that reflects past performance and may not predict future results. Investment decisions should consider multiple factors including risk tolerance, time horizon, and diversification. Always consult with a qualified financial advisor before making investment decisions.

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