Measure total growth and the compound annual growth rate between two values. This tool is designed for an investment with no external contributions or withdrawals during the measured period. It should not be used to grade a portfolio manager when cash flows changed the account balance.
Editorial Policy · Methodology · Corrections Policy
Before you enter your numbers
Enter a positive starting value, the ending value and the holding period in years. If distributions were paid out, determine whether the ending value represents total proceeds; otherwise the calculation may exclude income. Use consistent before-tax or after-tax values.
- Starting value
- Ending value
- Years held
Input reference
- Starting value: The value of the original investment. A positive starting amount is required for a meaningful percentage return. Additional purchases during the measurement period require a cash-flow-aware performance calculation.
- Ending value: The value remaining at the end or the proceeds received. Use consistent treatment of fees and taxes. If reinvested dividends are already part of this value, do not count them again as separate cash income.
- Years held: The duration of the calculation in years. Longer periods give growth or withdrawals more time to operate. This is a chosen modeling horizon, not a prediction of an investment term or your lifetime.
Formula and calculation method
Total return = (ending value − starting value) / starting value. CAGR = (ending value / starting value)^(1 / years) − 1. CAGR is a smoothed geometric annual rate, not the arithmetic average of annual returns.
Worked example
An investment that grows from 10,000 to 15,000 in five years has a 50% total return and about an 8.45% annualized return. It need not have earned 8.45% in any individual year. If the ending value is zero, the investment has lost 100%.
How to interpret the result
The result panel reports total return, annualized return and dollar gain.
Adding 5,000 of new savings can make an account rise from 10,000 to 15,000 without earning any investment return. For dated cash flows, use a money-weighted measure such as XIRR; for manager comparisons, a properly calculated time-weighted return may be appropriate. Neither is implemented here.
Total return vs annualized return
Total return measures the overall percentage change from starting value to ending value. Annualized return, or CAGR, answers a different question: what constant annual growth rate would turn the starting value into the ending value over the holding period?
For multi-year comparisons, CAGR is usually easier to compare across investments because it accounts for the length of time the money was invested.
CAGR is not a description of volatility
A portfolio can lose 20% and then gain 25%, returning to its original value. The arithmetic average of those returns is positive, but the two-year compound growth is zero. CAGR describes the end-to-start ratio and ignores how uncomfortable or risky the path may have been.
Compare performance over the same dates and after the same costs. A five-year return measured through a strong market peak is not directly comparable to a five-year period ending during a downturn. A benchmark comparison also requires an appropriate asset benchmark and consistent distribution treatment.
Separate investment performance from money you added or removed
A beginning and ending value alone can misstate performance when additional cash was deposited or withdrawn during the holding period. This calculator is best for a clean investment with no intermediate cash flows, or when those cash flows have already been accounted for in the values supplied.
For multi-year comparisons, annualized return is usually more comparable than total return because it adjusts for the length of the holding period. Do not compare a one-year total return directly with a ten-year total return without annualizing the longer period.
Use The Result In The Next Calculation
After measuring the holding-period return, use CAGR when you need an annualized comparison across different time spans. Do not transfer a historical return directly into a future projection without deciding whether that assumption is appropriate for the scenario.
Retirement planning guides · Calculation methodology
Rules and limits can change. Use these primary sources to verify time-sensitive details.
Investment Return Calculator FAQs
Can CAGR be negative?+
Yes. A positive ending balance below the initial value yields a negative CAGR. A zero ending balance represents a total loss; a zero starting value cannot produce a meaningful percentage return.
Where can I check the assumptions behind this result?+
Check the formula and limitations sections on the Investment Return Calculator page for the assumptions specific to this tool. The methodology page explains conventions shared across calculators, and Investor.gov investing resources is the reference for any time-sensitive statutory or product rule mentioned here.
What does the Investment Return Calculator result include?+
The result focuses on total return, annualized return and dollar gain. It is calculated from the inputs shown on this page rather than from live account, market or government data. Read the formula and limitations section before transferring the result into another planning tool.
What should I change when testing another Investment Return Calculator scenario?+
Change one major assumption at a time so you can see what drives the result. Useful inputs to test include Starting value, Ending value, Years held. Use a conservative case alongside your central estimate rather than relying on only the most favorable combination.
Can the Investment Return Calculator replace an official statement or professional advice?+
No. It is a planning calculator. Annualized return smooths performance into one rate. It does not show volatility or the sequence of gains and losses during the holding period. Use official statements and current rules when an exact legal, tax, pension or account figure is required.