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Investment Return Calculator: Total Return and CAGR

By Hesaplayıcı

The investment return calculator finds the total return, the annualized return (CAGR) and the profit or loss of an investment. Enter the initial value, the final value and the holding period. The annualized return assumes the investment grew by the same rate every year, so you can compare investments held for different periods.

Purchase amount plus costs. Use the same currency for both values.

Sale amount or current value.

For 1 year and 6 months, enter 1.5 years or 18 months.

Worked example: An investment of 100,000 grew to 150,000 in 3 years

Annualized return (CAGR)

14.47%

Total return
50.00%
Profit or loss
50,000
Holding period
3 years
Step by step

  1. Holding period

    t = years + months/12 + days/365

    t = 3 + 0/12 + 0/365 = 3 years

  2. Profit or loss

    profit = final value − initial value

    profit = 150,000 − 100,000 = 50,000

  3. Total return

    total return = (final value − initial value) / initial value × 100

    total return = (150,000 − 100,000) / 100,000 × 100 = 50.00%

  4. Annualized return (CAGR)

    annualized return = ((final value / initial value)^(1/t) − 1) × 100

    annualized return = ((150,000 / 100,000)^(1/3) − 1) × 100 = 14.47%

finance.investment-return

How to use

  1. Enter the Initial value: the purchase amount plus costs.
  2. Enter the Final value: the sale amount or the current value. Use the same currency for both values.
  3. Enter the Holding period and choose its unit: years, months or days.
  4. Press Calculate.

Formula

  • t = years + months/12 + days/365
  • Profit = final value − initial value
  • Total return = (final value − initial value) / initial value × 100
  • Annualized return = ((final value / initial value)^(1/t) − 1) × 100

t is the holding period in years. The initial value is the value at the start, the final value the value at the end. The annualized return is the compound annual growth rate (CAGR): if the initial value grew by this rate every year, it would reach the final value after t years.

Worked example

The worked example on this page shows an investment that grew from 100,000 to 150,000 in 3 years. The steps give the period, the profit, the total return and the annualized return. The annualized return is less than a third of the total return, because each year’s gain builds on the grown value of the year before.

Limits

The calculator leaves out interim cash flows: dividends, coupons, extra purchases and partial sales. Those need the internal rate of return (IRR). Tax, fees and inflation are not deducted; the result is the nominal return. For periods under one year, the annualized return carries the short period’s return over a full year and can mislead. Rates are not rounded; the profit is rounded to 0.01.

Frequently Asked Questions

What is the annualized return (CAGR)?

CAGR is the compound annual growth rate: the yearly rate at which the investment would have grown if it grew by the same rate every year. It is (final value / initial value)^(1/t) − 1, where t is the period in years.

What is the difference between total return and annualized return?

Total return is the whole gain over the period as a share of the initial value. The annualized return spreads that gain over the years with compounding, so you can compare investments held for different periods.

Why is the annualized return so large for a period under one year?

The calculator compounds the short period's return over a full year. That rate was not earned; for short periods, look at the total return.

Are inflation and tax included?

No. The calculator gives the nominal return. For the real return, compare it with inflation over the same period; include taxes and fees in the initial and final values.

Calculation rules

  • Total return is (final value − initial value) / initial value. The annualized return is the compound annual growth rate (CAGR): (final value / initial value)^(1/t) − 1.
  • In the period, 1 month is 1/12 year and 1 day is 1/365 year. The period is at most 100 years.
  • For a period under one year, the annualized return compounds the period’s return over a full year and can be very large.
  • Interim cash flows (dividends, coupons, extra purchases, partial sales), tax, fees and inflation are left out. Add costs to the initial value and deduct them from the final value.
  • Rates are not rounded. The profit is computed after rounding both values to 0.01.
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