Investment Return Calculator

What the investment return calculator does

The investment return calculator measures how an investment performed. It takes what you put in and what it is now worth, and reports the total return as a percentage, the compound annual growth rate (CAGR), and the profit in currency terms, so you can compare one holding with another on equal terms.

Total return versus CAGR

• Total return is the overall percentage change from start to finish across the entire holding period.
• CAGR expresses that growth as a single smoothed annual rate: how fast the investment grew per year on average, accounting for compounding.

Total return cannot compare investments held for different lengths of time; the same total return over two years is very different from that figure spread over ten. CAGR converts everything to a yearly rate, which is why professionals use it to rank investments regardless of how long each was held.

Why CAGR is the fairer measure

Dividing total return by the number of years to get an average ignores compounding and tends to overstate performance. CAGR reflects the fact that each year builds on the last, so it gives a more accurate annual figure and a like-for-like comparison between investments with different holding periods.

How the calculation works

The calculator compares the final value with the initial investment to find the total return, then annualises that return over the holding period to produce the CAGR. It also reports the profit, the difference between the final value and the amount invested. A large percentage on a small amount and a small percentage on a large amount can produce very different profits, so the money figure sits alongside the rates.

The inputs

• The initial amount invested.
• The final value of the investment.
• The holding period in years.
• Income received during the holding period, such as dividends (optional).
• An inflation rate, to turn the CAGR into a real annual return (optional).
• A tax rate, applied to a gain to give an after-tax profit (optional).

An investment that paid regular income delivered more than its price change alone suggests. If you took dividends or distributions as cash, enter them in the income field so the result reflects total return. If you reinvested them, they are already in the final value, so leave the income field at zero to avoid counting them twice.

Reading your result

The total return shows the overall gain, the CAGR shows its annual pace, and the profit puts it in money. The calculator also shows the profit per year, a real CAGR after the inflation rate you enter, and an after-tax profit, with tax applied only to a gain. Use the CAGR when comparing investments, because it removes the distortion of different time periods, and the total return and profit when you want the overall outcome of a single holding.

Interpreting performance

• Compare the CAGR against a relevant benchmark, not against zero.
• Past performance does not guarantee future returns.
• Account for inflation, since a nominal return that barely beats inflation adds little real value.

A return figure does not capture risk. An investment that delivered a strong CAGR through a volatile period is not obviously better than a steadier one with a slightly lower rate. Fees, taxes, and the effort involved also shape the real value of an investment.

When to use this tool

• Judging the performance of shares, property, or a fund.
• Comparing investments held for different lengths of time.
• Turning a total gain into a comparable annual rate.
• Recording a clear return figure.

This is general information only and not financial advice.

About This Investment Return Calculator

Use this investment return calculator 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.