Finance

Farm Return on Investment Calculator (40 Years)

Calculate return on investment as a percentage. This farm version uses a 40-year planning term as its starting point.

The Return figure is the total percentage gain over the whole 40 years, so a positive value means the final value is higher than the amount invested, and the same percentage spread over a longer period means a slower yearly pace than the same percentage over a shorter period.

Formula

Return equals final value minus invested amount, divided by invested amount, times 100.

How it works

A positive return means the final value is higher than the amount invested.

Worked example

Amount invested $10,000, final value $15,000, term 40 years. First, the gain is $15,000 minus $10,000, which is $5,000. Using the page formula, return is $5,000 divided by $10,000, times 100, which is 50.00%. That is the total return over the whole 40 years, not a yearly rate. As an illustration only, not the output of this page, the annualised rate behind the same result is about 1.02% a year, because $15,000 divided by $10,000 is 1.50, and the 40th root of 1.50 is about 1.0102. Over 40 years the yearly pace is barely above 1%, which is a warning, not a success story. For farm planning this is a lifetime check: an investment that only gained half its value over a working lifetime probably trailed rising farm, repair and living costs for most of that time.

Who this term suits for a farm household: nobody looking for a success story: a lifetime warning for a young farm family starting today, showing that a $10,000 farm investment which only reaches $15,000 after 40 years has not kept pace with the costs that family will face along the way.

FAQs

What is a good ROI?
There is no single good figure. Compare returns over the same period and with the same risk before deciding.

Is this farm calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Is 50.00% over 40 years actually a poor return for a farm investment?
Yes. As an illustration only, it is about 1.02% a year, which is a very slow pace over a working lifetime, and it is before fees, taxes and decades of rising farm costs.

What does 1.02% a year mean for buying power over 40 years, when farm costs rise?
It means the gain is likely to have been outrun by the cost of feed, fuel, machinery and labour. A nominal gain of $5,000 over 40 years can still leave a farm family worse off in real terms.

What should a farm household check before trusting a 40-year return figure?
Everything the page does not count: fees, taxes, maintenance, replacements and the changing value of money itself. A 40-year figure should never be used alone to justify a new farm purchase.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.