savingcalculators

Investment Return Calculator: CAGR & Total Return

Use this investment return calculator to compute CAGR — the compound annual growth rate of any investment. Compare apples-to-apples returns across stocks, real estate, and other assets.

$
$
yrs
CAGR (annualized return)0.00%
Total return0.00%
Total gain / loss$0
$10,000 equivalent result$0
Advertisement  ·  728 × 90

How this calculator works

CAGR is the geometric mean annual return — the constant rate that would have taken your starting value to your ending value over the given period:

CAGR = (End Value ÷ Start Value)1 / Years − 1
End Value
Portfolio or investment value at the end of the period
Start Value
Portfolio or investment value at the start of the period
Years
Length of the holding period in years

Why CAGR matters: An investment that goes up 50% one year and down 33% the next has a 0% CAGR — not the 8.5% simple average of those two returns. CAGR captures the actual compounding effect. The S&P 500's CAGR from 1980–2023 was approximately 11.5% (before inflation).

Limitation: CAGR hides volatility. Two funds with the same CAGR can have very different risk profiles. Always pair CAGR analysis with a measure of drawdown or standard deviation.

Source: S&P 500 historical return data from S&P Dow Jones Indices. CAGR formula is a standard financial mathematics identity.

FAQ

What is a good CAGR for an investment?
Context matters. The S&P 500's long-run CAGR is ~10–11% nominal or ~7% real (after inflation). Significantly higher returns usually carry higher risk. Bonds typically return 3–5% CAGR. A 15–25%+ CAGR for a business or private investment is exceptional.
What is the difference between CAGR and average annual return?
Arithmetic average adds annual returns and divides by years. CAGR accounts for compounding — it equals the actual growth rate. CAGR is always ≤ arithmetic average. High volatility widens the gap, which is why volatile funds can look better on average returns than their CAGR suggests.
Can I use CAGR to compare two investments?
Yes — CAGR normalizes investments to the same annual basis. Example: 80% total return over 5 years = 12.5% CAGR. 120% total return over 8 years = 10.5% CAGR. Investment A outperformed annually despite the lower total return.
What is a good rate of return on investments?
Long-term US stock-market average is roughly 10% nominal / 7% real, measured over 30+ years. Diversified bond portfolios average 4-5% nominal. A 60/40 stock/bond mix targets ~7% nominal with lower volatility. Anything above 12% sustained over decades is exceptional.
How is CAGR (compound annual growth rate) calculated?
CAGR = (final / initial)1/years − 1. It is the steady annual rate that would have produced your actual end value, smoothing out volatility. If you turned $10,000 into $20,000 over 5 years, CAGR = (20000/10000)1/5 − 1 = 14.87%.
Why is CAGR different from average return?
CAGR accounts for compounding; average return does not. If your portfolio gains 50% then loses 50%, the average return is 0% but CAGR is −13.4% (because $100 → $150 → $75). CAGR is the honest number for comparing investments.
Advertisement  ·  728 × 90

Related calculators

Learn more on the blog

Advertisement  ·  responsive horizontal