Investment Return Calculator
Find the annualized return (CAGR) on any investment by entering your starting value, ending value, and how many years you held it. Ideal for comparing stocks, funds, or real estate performance over different time horizons.
About this calculator
This calculator computes the Compound Annual Growth Rate (CAGR), which tells you the smooth annual rate at which an investment would have grown to reach its final value. The formula is: CAGR = (finalValue / initialInvestment)^(1 / investmentPeriod) − 1, expressed as a percentage. Unlike simple return, CAGR accounts for compounding, making it the standard metric for comparing investments held over different periods. For example, doubling your money in 5 years versus 10 years produces very different CAGRs even though the total gain is identical. CAGR does not capture volatility or interim losses — it assumes steady growth — so it is best used alongside other metrics like standard deviation or Sharpe ratio for a full picture.
How to use
Suppose you invested $10,000 and it grew to $18,500 over 7 years. Step 1: Divide final value by initial investment: 18,500 / 10,000 = 1.85. Step 2: Raise to the power of 1/7: 1.85^(1/7) ≈ 1.0922. Step 3: Subtract 1 and multiply by 100: (1.0922 − 1) × 100 = 9.22%. Your investment earned an annualized return of approximately 9.22% per year. Enter your own numbers in the fields above to instantly see your CAGR.
Frequently asked questions
What is the difference between CAGR and average annual return?
CAGR (Compound Annual Growth Rate) measures the single constant rate that would take your investment from start to finish, accounting for compounding. Average annual return simply averages yearly percentage gains and can overstate performance when returns fluctuate. For example, a +50% year followed by a −50% year gives an average return of 0% but an actual loss of 25%. CAGR correctly shows a negative result in that scenario, making it the more accurate measure of real investment growth.
How do I interpret a negative investment return from this calculator?
A negative CAGR means your investment lost value over the period — the final value is less than the initial investment. For instance, investing $5,000 that shrinks to $3,500 over 4 years yields a CAGR of about −8.5% per year. This is useful for assessing how badly a position underperformed. Comparing the negative CAGR to a benchmark like the S&P 500 over the same period helps you understand the true opportunity cost of holding that asset.
When should I use annualized return instead of total return?
Use annualized return (CAGR) whenever you want to compare investments held for different lengths of time on a level playing field. Total return simply shows the overall percentage gain regardless of duration, so a 100% total return over 20 years is far less impressive than the same gain over 3 years. Annualized return normalizes for time, making it the preferred metric for fund performance reports, retirement planning, and side-by-side asset comparisons. Use total return when you only care about the absolute outcome of a single, fixed-duration investment.