Expected Return Calculator
The expected return calculator above estimates your portfolio's long-run return by taking a weighted average of each holding's expected return. It weights every asset by its dollar amount, so your largest position drives the result.
Enter how much you hold in stocks, bonds, real estate, and cash to see your blended figure. Remember: expected return is a long-run estimate, not a promise of what you will earn next year.
How it's calculated
Expected return is the weighted average of each holding's expected return. The calculator above multiplies each asset's portfolio weight by its assumed long-run return, then adds the pieces together. The formula is simple: (weight of asset A × return of A) + (weight of asset B × return of B), and so on.
These return figures are model assumptions, not guarantees. This tool uses long-run estimates of 10% for stocks, 4% for bonds, 8% for real estate, and 2.5% for cash. Because the math weights by dollars, your biggest holding has the most influence on the final number. To weigh that return against its risk, see the portfolio risk calculator.
A worked example
Suppose you hold $70,000 in stocks, $20,000 in bonds, and $10,000 in cash, a $100,000 portfolio split 70% / 20% / 10%. The calculator weights each return: 70% × 10% gives 7%, 20% × 4% gives 0.8%, and 10% × 2.5% gives 0.25%.
Add them up: 7% + 0.8% + 0.25% = 8.05%. That 8.05% is your portfolio's expected return.
The portfolio carries 11.35% volatility and a Sharpe ratio of 0.49. In one year, $100,000 at an 8.05% expected return grows to about $108,050, though any single year may land much higher or lower.
Common mistakes to avoid
- Treating the expected return as a forecast for one specific year. It is a long-run average, and actual yearly results swing well above and below it.
- Ignoring volatility. A higher expected return almost always comes with bigger price swings, so review the risk figure too.
- Weighting holdings equally instead of by dollar amount. Your largest position dominates the weighted average, not the number of holdings.
- Using outdated balances. Update your dollar amounts after big deposits, withdrawals, or market moves so the weights stay accurate.
- Confusing the model's assumed returns with guaranteed returns. These are estimates, and real assets can lose money in any given year.
Frequently asked questions
What is an expected return calculator?
An expected return calculator finds your portfolio's weighted average return. It multiplies each holding's dollar weight by its assumed long-run return, then sums the results. The calculator above does this instantly across stocks, bonds, real estate, and cash.
How is portfolio expected return calculated?
Portfolio expected return is the weighted average of each holding's expected return. You multiply each asset's share of the portfolio by its expected return, then add the parts. For example, 70% × 10% + 20% × 4% + 10% × 2.5% = 8.05%.
Is expected return what I will actually earn?
No. Expected return is a long-run average, not what you will earn in any given year. Real results swing above and below it. The return figures here are model assumptions, not guarantees, and investments can lose money.
Why does my biggest holding affect the result the most?
Because the calculation weights each asset by its dollar amount. A holding that makes up 70% of your portfolio influences the average far more than one at 10%. Your largest position dominates the final expected return.
Does a higher expected return mean more risk?
Usually, yes. FINRA notes that the higher the expected return, the greater the risk of loss. Stocks carry a higher expected return than bonds or cash, but also larger price swings, so check the volatility figure too.