Investment Return Calculator
Calculate your total return, annualized return (CAGR), and real return after inflation. Properly handles additional contributions made during the investment period — most online calculators get this wrong.
Last updated: April 2026
Sum of all contributions made between start and end
US long-term average: ~3%
Total return vs annualized return
The total return is the simple percentage change from start to end. The annualized return (CAGR) converts that into the equivalent yearly rate. The same total return can mean very different annualized returns depending on the time period.
| Total return | Time period | Annualized (CAGR) | Quality |
|---|---|---|---|
| 100% | 5 years | 14.87%/year | Excellent |
| 100% | 10 years | 7.18%/year | Good |
| 100% | 20 years | 3.53%/year | Mediocre |
| 50% | 3 years | 14.47%/year | Excellent |
| 50% | 7 years | 5.96%/year | Decent |
This is why CAGR is the standard for comparing investments. A "doubled my money" claim sounds great, but doubling in 5 years is dramatically better than doubling in 20 years. Always pair return figures with time periods.
The CAGR formula
Worked example. $10,000 invested grows to $18,500 over 7 years. CAGR = (18,500 / 10,000)^(1/7) - 1 = (1.85)^0.1429 - 1 = 1.0920 - 1 = 0.0920 or 9.20% annualized.
That 9.20% is the smooth equivalent. The actual year-by-year returns might have been -8%, +22%, +14%, -3%, +18%, +9%, +11% — averaging out to 9.20% compounded. CAGR ignores the bumpiness and shows you what the constant equivalent rate would have been.
When CAGR is misleading: when returns are highly volatile, CAGR understates the bumpy ride. A portfolio with -50% / +100% over 2 years has a 0% CAGR (you end where you started) but the journey was harrowing. Always look at volatility (standard deviation) alongside CAGR for a complete picture.
Three real return scenarios
1. The S&P 500 index investor
Sarah invested $25,000 in an S&P 500 index fund 10 years ago. Today it is worth $63,000. Total return: 152%. CAGR: 9.7% per year. After 3% average inflation, real return: 6.5% annualized. Her $63,000 is worth about $46,900 in today\'s purchasing power. Real profit in today\'s dollars: about $21,900. A reasonable result that matches the long-term S&P 500 average.
2. The crypto holder
Marcus bought $5,000 of Bitcoin in early 2020. Five years later it\'s worth $32,000. Total return: 540%. CAGR: 45% per year. After inflation: about 41% real annual return. Spectacular by any measure — but it included a 75% drawdown along the way (2022 bear market). The question is whether Marcus held through the drop or sold and bought back. CAGR doesn\'t show the journey, only the start and end points.
3. The savings account "investor"
Lisa kept $15,000 in a 0.5% savings account for 10 years. Final value: $15,768. Total return: 5.1%. CAGR: 0.5% annualized. After 3% inflation, real return: about -2.5% per year. Her money grew nominally but lost roughly 25% of its purchasing power over the decade. This is the silent damage of low-yield savings accounts during inflation. Cash in a near-zero savings account is one of the worst long-term holdings during inflationary periods.
Common return calculation mistakes
1. Confusing total return with annual return
"My portfolio is up 80%" sounds great until you find out it took 25 years. That\'s a 2.4% annualized return — worse than a savings account. Always pair return with time period.
2. Ignoring inflation
An 8% nominal return at 3% inflation is really only 4.85% in purchasing power. Long-term planning that ignores inflation overstates the real outcome by 30-50%.
3. Not accounting for contributions
Simple "(End - Begin) / Begin" calculations break down when you added money during the period. Use the Modified Dietz approach (which this calculator uses) for an accurate measurement.
4. Comparing returns over different time periods
An investment up 30% in 1 year is not "the same as" an investment up 30% in 5 years. Always convert to annualized returns before comparing.
5. Forgetting fees, taxes, and slippage
Pre-tax, pre-fee returns are theoretical. Net returns after expense ratios, advisory fees, transaction costs, and taxes are what you actually keep.
Frequently asked questions
What is the difference between total return and annualized return?
Total return is the total percentage change from start to end of the investment, regardless of how long it took. Annualized return (also called CAGR — compound annual growth rate) converts that total return into an equivalent yearly rate. A 50% total return over 5 years equals an 8.45% annualized return, because (1.0845)^5 = 1.50. Annualized return is more useful for comparing investments held for different time periods. Total return is simpler but can be misleading — a 100% total return over 20 years (3.5% annualized) is much worse than a 100% total return over 7 years (10.4% annualized).
What is CAGR?
CAGR (Compound Annual Growth Rate) is the constant annual rate of return that would have produced the same final value if returns had been smooth instead of variable. The formula is CAGR = (End Value / Begin Value)^(1/years) - 1. Example: $10,000 grows to $18,500 over 7 years. CAGR = (18,500/10,000)^(1/7) - 1 = 9.2%. CAGR is the standard way to compare investment performance across different time periods. The actual year-by-year returns might have been -10%, +25%, +5%, +30%, -8%, +18%, +12% — but the smooth equivalent is 9.2%.
How does inflation affect my real return?
Inflation reduces the purchasing power of your gains. If your investment returns 8% nominal in a year when inflation is 3%, your real (inflation-adjusted) return is only about 4.85%. The formula: real return = (1 + nominal return) / (1 + inflation rate) - 1. Over long periods, this matters enormously. A 10% nominal return becomes a 6.8% real return at 3% inflation. Over 30 years, the difference compounds dramatically. Always compare real returns when planning long-term goals like retirement.
What is a good investment return?
Historical context: the S&P 500 has averaged about 10% nominal / 7% real over the past century. The 60/40 stock/bond portfolio averages about 8% nominal / 5% real. High-yield savings accounts currently pay 4-5% nominal (1-2% real). Safe Treasury bonds pay 4-5% nominal. Any investment claiming sustained returns above 15-20% per year long-term is either taking enormous risk or misrepresenting returns. Be skeptical of any "guaranteed" returns above 6-7%.
How do contributions affect the return calculation?
Adding contributions during the investment period complicates return measurement. Simple ROI ((End - Begin - Contributions) / Begin) underestimates the true return because contributions made later in the period had less time to grow. The proper approach is the Modified Dietz method or IRR (internal rate of return), which account for the timing of cash flows. This calculator uses a Modified Dietz approximation: it treats contributions as if they were spread evenly through the period, which is accurate enough for most purposes.
What is the difference between time-weighted and money-weighted return?
Time-weighted return measures the performance of the underlying investment, ignoring when you put money in or out. It is what mutual fund and ETF tracks report. Money-weighted return (also called IRR) measures your specific personal experience, including the impact of timing your contributions and withdrawals. For evaluating an investment manager, use time-weighted. For evaluating your personal results (or whether your timing decisions added value), use money-weighted. They can differ significantly when you make large contributions or withdrawals during the period.
How much should I expect from a stock index fund?
Historically, the S&P 500 has averaged about 10% nominal returns per year. After subtracting 3% inflation, that's 7% real return — what you can actually buy with your money. But annual returns vary widely: 2024 was +25%, 2025 was +16.39%, 2022 was -19%, 2008 was -37%. Any single year can be wildly different from the average. Long-term averages only hold over multi-decade periods. For 5-year horizons, returns can deviate significantly in either direction.
What is the rule of 72?
The Rule of 72 estimates how long it takes money to double at a given annual return. Divide 72 by the rate. At 6%, money doubles in 12 years. At 9%, in 8 years. At 12%, in 6 years. The rule works best for rates between 5% and 15%. For your specific annualized return shown in the calculator above, the doubling time is automatically computed.
Should I include dividends in my return calculation?
Yes — total return includes both price appreciation and dividends reinvested. The S&P 500's 10% historical return includes dividends. Without dividends, US stocks have averaged closer to 6-7% over the long run. When comparing investments, always use total return figures (not just price returns). Most brokerages report total return on your account by default, but some price charts show only price changes.
How do I calculate ROI?
Basic ROI = (Final Value - Initial Investment) / Initial Investment × 100. For a $10,000 investment that grew to $14,000, ROI = ($14,000 - $10,000) / $10,000 × 100 = 40%. But this doesn't account for time. A 40% return over 2 years is much better than 40% over 10 years. Always pair ROI with the time horizon, or use annualized return (CAGR) for comparison purposes.
What is the difference between nominal and real returns?
Nominal returns are the raw percentage change in your investment value. Real returns subtract inflation to show the change in actual purchasing power. If your investment returns 8% in a year of 3% inflation, your nominal return is 8% but your real return is only about 4.85%. For long-term planning, use real returns — otherwise you'll overestimate what your future portfolio will buy. Most retirement projections should be done in real terms.
Why does my actual return differ from the published fund return?
Published fund returns are time-weighted — they show the performance of the fund itself, not your personal experience. Your actual return depends on when you bought and sold, how much you contributed, and timing of dividends/distributions. If you invested heavily right before a downturn, your money-weighted return will be lower than the fund's reported return. The opposite can also be true. Brokerages typically show your "personal performance" or "money-weighted return" separately from the fund's reported return.
Methodology: Calculator uses the standard CAGR formula for the case without contributions. With contributions, it uses a Modified Dietz approximation that assumes contributions are spread evenly through the period. For exact money-weighted returns with irregular cash flows, IRR (internal rate of return) is the correct method.
Last updated: April 2026.
Disclaimer: This calculator provides estimates for educational purposes only and is not investment advice. Past performance does not predict future results.