Updated · Built and checked by the PlinzoTools team, formulas tested against published sources
Calculate total and annualized (CAGR) return from an investment's starting and ending value.
Total return alone can be misleading when comparing investments held for different lengths of time -- a 50% return over 10 years is a very different result than a 50% return over 1 year. This calculator computes both the raw total return and the annualized return (CAGR, compound annual growth rate), which properly normalizes for time and is the correct figure for comparing investments across different holding periods.
Enter your investment's initial value, final value, and the number of years you held it.
Total Return % = ((Final − Initial) ÷ Initial) × 100
Annualized Return (CAGR) % = ((Final ÷ Initial)1/years − 1) × 100
Use CAGR (not total return) to fairly compare two investments held for different lengths of time. This same "income or gain over starting value" percentage also covers dividend yield calculations -- for a stock's dividend yield, use annual dividend per share as the "gain" and current share price as the "initial value" over a 1-year period.
Suppose a hypothetical investment grows from $8,000 to $11,000 over 3 years. The total return is (11,000 minus 8,000) divided by 8,000, which is 37.5%. The CAGR is (11,000 divided by 8,000) to the power of one-third, minus 1, which is about 11.2% per year. That is the steady annual rate that would turn $8,000 into $11,000 in three years, even though the real path probably included good and bad years.
A common mistake is averaging yearly returns. If an investment falls 20% in one year and rises 20% the next, the simple average is 0%, yet $1,000 becomes $800 and then $960, a net loss of 4%. CAGR captures this because it works from the start and end values. It is the honest measure of what your money actually did over the period.
For a realistic result, use the final value after fees and, if relevant, after taxes. If you added or withdrew money during the period, the simple start and end values will not reflect performance accurately, since a deposit will look like a gain. In that case, this calculator will overstate or understate the true return, and a money-weighted or time-weighted return method is needed. Dividends that were paid out rather than reinvested also have to be added to the final value if you want them counted.
Past performance does not indicate what will happen next, and CAGR smooths out volatility, so it says nothing about the risk you took. Two investments with the same CAGR can differ widely in how bumpy the ride was. For personal advice about your portfolio, consult a licensed financial adviser.
Total return doesn't account for how long the money was invested -- CAGR normalizes to an annual rate, making it the fair way to compare investments held for different time periods.
No -- this assumes a single initial value growing to a single final value with no additional contributions along the way; for a plan involving regular contributions, use the Savings Calculator instead.
Yes, using decimals, such as 0.5 for six months. Remember that annualizing a short period magnifies the result and may not be sustainable.
The calculator will show negative total and annualized returns, indicating a loss over the period.
No. The arithmetic average of yearly returns is usually higher than CAGR when returns vary, and CAGR reflects the true compounded outcome.
Reference: Social Security Administration