ROI & Annualized Return (CAGR) Calculator
“It went up 80%” sounds great — but over how long? This calculator gives you both numbers that matter: the total return on an investment and, more importantly, the annualized return (CAGR) — the steady yearly rate that lets you compare investments held for different lengths of time on equal footing.
How this calculator works
Total return is the simple percentage change from start to finish:
total return = (final − initial) ÷ initial
CAGR (compound annual growth rate) converts that into a smooth annual rate over the holding period t:
CAGR = (final ÷ initial)^(1 ÷ t) − 1
CAGR is the number professionals quote because it’s comparable: a 100% total return over 2 years (~41% a year) is very different from 100% over 10 years (~7% a year), even though the headline gain is identical.
What CAGR hides
CAGR is a smoothedaverage — it describes the start and end points as if growth were perfectly steady, ignoring the bumps in between. It also doesn’t account for additional contributions (use the compound interest calculator for those) or for inflation (the inflation calculator shows real vs nominal). It’s the cleanest single-number measure of how an investment performed, not a forecast.
Frequently asked questions
- What's the difference between total return and CAGR?
- Total return is the overall percentage gain regardless of time. CAGR expresses that as an equivalent steady annual rate, so you can compare investments held for different periods fairly.
- Why is CAGR better for comparing investments?
- Because time matters. A 50% gain in 1 year is excellent; the same 50% over 10 years is mediocre. CAGR normalizes for the holding period so the comparison is apples-to-apples.
- Does this include dividends or extra contributions?
- Only if you include them in the final value. CAGR here is based purely on start and end values; for ongoing contributions use the compound interest or savings goal calculators.