Investment Return Calculator (Canada)

Enter what you started with, what it is worth now, how many years you held it and anything you added along the way, and the calculator returns four measures: the gain in dollars, the net gain after your later contributions, the total return as a percentage of everything you invested, and the annualized rate. Every figure comes from your inputs, so the tool works for a TFSA, an RRSP, an FHSA or a non-registered account.

The four numbers the tool returns

Total gain is the final value minus the initial investment. Net gain also subtracts later contributions, so money you added is not counted as growth. Total return divides the net gain by everything you invested, which makes positions of different sizes comparable. Annualized return, the CAGR, converts the total into a yearly rate using compounding.

A worked example

You put $10,000 into a Canadian equity fund and five years later, with no further contributions, it is worth $16,105. The gain is $6,105, a total return of 61.05%. Dividing $16,105 by $10,000 gives 1.6105; raising that to the power of one fifth and subtracting one gives 0.10, a CAGR of 10% a year.

The same $6,105 gain on a $100,000 stake is a total return of only 6.105%, which is why the percentage matters more than the dollars.

Why the contributions field exists

Canadian accounts rarely have one deposit: TFSA room accrues every year, RRSP room follows earned income, and most people contribute in instalments. The contributions field keeps deposits out of the gain. It cannot tell when each contribution arrived, though, and timing matters: a start-to-end CAGR treats all of it as invested from day one, which flatters a portfolio that got most of its money late and penalizes one that got it early. The larger your contributions compared with the initial investment, the more the CAGR here is an indication rather than a measurement, and the better a money-weighted return would serve.

What CAGR measures, and what it does not

CAGR is the smooth yearly rate that takes your starting amount to your ending amount. Markets do not deliver a smooth rate: a holding that compounded at 10% for five years may have fallen 20% in one of them. CAGR is good for comparison and says nothing about the ride.

What you keep depends on the account

In a TFSA, growth and withdrawals are never taxed, and withdrawn amounts are added back to your room on January 1 of the next year. In an RRSP, tax is deferred: every dollar withdrawn is taxed as income in that year, so the balance overstates what you can spend, and room used by a withdrawal does not come back. In a non-registered account tax applies as you go, and the type of return matters: only half of a realized capital gain is taxable, eligible Canadian dividends are grossed up by 38% and offset by the dividend tax credit (non-eligible by 15%), and interest is taxed in full.

A TFSA and an RRSP showing the same balance are not worth the same, and in a non-registered account a return made of capital gains is worth more after tax than the same return made of interest.

Foreign withholding tax

Under the Canada-US treaty, US dividends paid to a Canadian resident are generally subject to 15% withholding. In a non-registered account you can normally recover it through the foreign tax credit. In an RRSP holding US-listed securities directly, the treaty exempts the dividend from withholding. In a TFSA the 15% is withheld and cannot be recovered. That permanent reduction does not show in a fund’s reported return, and it is often part of why a US holding’s measured CAGR in a TFSA trails its index.

Getting the inputs right

Add commissions and account fees to the initial investment so costs reduce the measured return, and use an ending balance that includes reinvested distributions. In a non-registered account, the superficial loss rule denies a loss if you buy the same security within 30 days before or after selling it and still hold it 30 days later; the loss is added to the new shares’ cost base instead. Your T5008, T5 and T3 slips are the source documents for reporting sales on Schedule 3.

What the model does not measure

The tool models a lump sum at the start and one value at the end, with the contributions field the only allowance for money added in between and none for its timing. It reports a nominal figure and deducts no tax or trading costs unless you enter net figures. A plan with frequent regular deposits is better measured with a dollar-cost averaging or compound growth calculator.

About This Tool: Investment Return Calculator Canada

Investment return calculator Canada: use this tool to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.