Holding Period Return: Definition, Formula, and Example

By Matthew Frankel, CFP – Updated Jul 10, 2025 at 11:51 AM EST

Key Points

Holding period return measures total gains or losses over the period you own an investment.
To calculate, add any investment income to final value, divide by initial investment.
Annualized return can convert varying holding periods to comparable yearly returns.

There are several different investment return metrics you are likely to encounter. Annualized return is one popular metric, and you'll also see returns over a certain number of months or years -- for example, it's common for people to look at the five-year and 10-year returns of stocks or mutual funds.

Holding period return, also abbreviated as HPR, is another example that could be more useful to you as an individual investor. In a nutshell, holding period return is the metric that tells the gains you made on a particular investment. After all, you don't always hold investments for a specific block of time, like one year, so the holding period return looks at the entire time you've been invested.

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Simply add the investment's ending market value to the cumulative amount of income it generated in your portfolio and divide by the amount of money you initially invested.

It's also worth noting that if you automatically reinvest your dividends, you can simply use your investment's ending value in the numerator instead of adding up your income.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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