How to use the drawdown recovery calculator
- Enter the percent your investment fell from its peak, above 0 and below 100.
- Optionally enter the value at the peak to see dollar amounts, and a yearly return you assume for the time to recover.
- Read the gain needed to get back to the peak and, with a return, how many years that takes.
- Use the comparison table to see how the required gain grows as losses get larger.
Formula
gain needed = 1 / (1 - fall) - 1
years to recover = ln(1 / (1 - fall)) / ln(1 + yearly return)
check: (1 - fall) x (1 + gain) = 1
The gain is measured from the lower value after the fall, which is why it is always larger than the fall. The years assume the same return every year with no deposits or withdrawals.
A 30% fall
A portfolio worth $100,000 falls 30% to $70,000. To get back to $100,000 it must gain $30,000, which is 30,000 / 70,000 = 42.86% of the lower value. At 7% a year, recovery takes ln(1 / 0.7) / ln(1.07) = 5.27 years.
A 50% fall needs a 100% gain, which takes 9.01 years at 8%. A 10% fall needs only 11.11%, and at 6% a year that is 1.81 years. At the extreme, a 99% fall needs a gain of 9,900%.
Why the gain is bigger than the loss
Percentages depend on what they are measured from. A 50% loss takes half of the original amount away. Getting that half back means doubling what is left, which is a 100% gain. The deeper the fall, the more lopsided the sums become, and that is why avoiding very large losses matters more than the next few points of return.
What the time estimate means
The years figure answers a narrow question: how long would a steady return take to refill the gap? Real returns come in uneven years, and the order matters. For that effect, see the Sequence of Returns Risk Calculator, and use the Percent Change Calculator to check any pair of values.
Assumptions and limits
- The return is the same every year and applies only to the remaining value.
- No deposits, withdrawals, taxes or fees are included.
- A return of zero or less never recovers the loss.
- The page does not predict returns or recommend any action.
Frequently asked questions
Why does a 50% loss need a 100% gain?
After a 50% loss, you hold half of the original amount. To return to the original amount, the remaining half must double, which is a 100% increase on the lower base.
Does the value at the peak change the percentages?
No. The gain needed and the time depend only on the percent fall and the return. The peak value only converts the result into dollars.
Why is there no result for the years?
The years need a yearly return above zero. Leave the return blank to skip it, or enter a positive number. At zero or below, the value does not climb back.
Is this the same as a maximum drawdown?
A maximum drawdown is the largest peak to low fall in a history of values. This page takes that percent as an input and shows what recovering from it requires.