Rate of Return Calculator — CAGR & Total Return
Enter your initial investment value, final value, and holding period to calculate the total return percentage and compound annual growth rate (CAGR) — the annualised rate that grows the investment from start to finish.
years
Annualised return assuming compounding — (final/initial)^(1/years) − 1
- 1
Gain / Loss
15,000 − 10,000 = 5,000 - 2
Total return
5,000 ÷ 10,000 × 100 = 50 % - 3
Value ratio
15,000 ÷ 10,000 = 1.5How many times larger the final value is vs the initial value. - 4
CAGR
1.5^(1 ÷ 5) − 1 = 8.45 %
How does this calculator work?
Total return = (final − initial) / initial × 100%. CAGR = (final/initial)^(1/years) − 1, converted to percent. Both are gross figures before tax, fees, and inflation. CAGR is the better metric for comparing investments of different lengths. Enter initial value, final value, and years to get both instantly.
Formula
How this is calculated
The total return (or simple return) is the percentage change in value from the initial investment to the final value: (V₁ − V₀) / V₀ × 100. It measures the total gain or loss over the entire holding period regardless of how long that period was. A 50% total return over two years looks the same as over ten years on this single metric, which makes comparing investments with different holding periods misleading.
CAGR (Compound Annual Growth Rate) solves this by expressing the return as a steady annual rate: CAGR = (V₁/V₀)^(1/years) − 1. It answers the question "what constant annual return would have produced the same final value?" Two investments can have the same CAGR but very different volatility paths; CAGR says nothing about year-to-year fluctuations.
Both metrics are calculated on a gross basis — they reflect the change in portfolio value and do not account for taxes, transaction fees, inflation, or the timing of any cash flows (deposits or withdrawals). For investments with periodic contributions or distributions, the internal rate of return (IRR) or money-weighted return would be more appropriate. The area chart shows the smooth CAGR-compounded growth path from initial to final value.
Frequently asked questions
Total return is the percentage gain or loss over the whole period. CAGR converts that into an equivalent annual rate. A 61% total return over 5 years equals a CAGR of about 10% per year (1.10⁵ = 1.61). CAGR makes comparing different-length investments fair.
Yes. If the final value is below the initial value, CAGR is negative. For example, if a £10,000 investment falls to £7,000 over 5 years, CAGR = (0.7)^(1/5) − 1 ≈ −6.9% per year. The calculator handles losses as long as the final value is greater than zero.
Only if those cash flows are reflected in the final value you enter. If dividends were reinvested and are included in V₁, they're captured. If you received dividends as cash and didn't include them in V₁, the CAGR will understate your true return. For portfolios with regular contributions or withdrawals, use an IRR calculator.
Also known as
TG we-Calculate Editorial Team. (2026). Rate of Return Calculator — CAGR & Total Return [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/rate-of-return-calculator
TG we-Calculate Editorial Team. "Rate of Return Calculator — CAGR & Total Return." TG we-Calculate. 2026. https://we-calculate.com/calculator/rate-of-return-calculator.
TG we-Calculate Editorial Team, "Rate of Return Calculator — CAGR & Total Return," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/rate-of-return-calculator
@misc{wecalculate_rate_of_return_calculator, title = {Rate of Return Calculator — CAGR & Total Return}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/rate-of-return-calculator}}, year = {2026}, note = {TG we-Calculate} }
Did this calculator help you?