Use this investment return calculator to find the annualized return you’ve earned on an investment, even if you added money along the way. Or switch modes to find the return you’d need to reach a goal. It compares your result with savings accounts and the stock market’s long-term average.
—
Growth over time
The same money at other returns
| Return | Ending value | Gain |
|---|
Estimates only. Returns are annualized (compounded yearly) and assume contributions at the end of each month, before taxes and fees. Past performance does not guarantee future results.
Total return vs. annualized return
There are two common ways to measure how an investment did:
- Total return (ROI) is your gain divided by the amount you put in. It tells you how much you made but not how long it took.
- Annualized return is the steady yearly rate that would turn your money into its current value. It lets you compare investments held for different lengths of time.
In the calculator’s default example, you invest $10,000, add $200 a month for 10 years, and end up with $50,000. You put in $34,000 and gained $16,000, a 47.1% total return. That works out to an annualized return of 5.88%, or 2.80% a year after 3% inflation.
You can’t simply divide total return by the number of years. Returns compound, and money added later had less time to grow, so the calculator solves for the rate that matches your actual deposits.
How to calculate annualized return (CAGR)
For a single investment with no additions, the annualized return is the compound annual growth rate (CAGR):
CAGR = (Ending value ÷ Starting value)1 ÷ years − 1
For example, $10,000 that grows to $25,000 in 8 years has a CAGR of 12.14%. Its total return is 150%. A $5,000 stock purchase worth $7,500 three years later has a total return of 50% and an annualized return of 14.47%.
When you add money over time, there’s no simple formula, so the calculator finds the rate by trial and error, the same way a spreadsheet’s RATE function does.
Is your return good?
A useful way to judge a return is to compare it with what you could have earned elsewhere:
| Benchmark | Typical return |
|---|---|
| National average savings account | 0.37% APY |
| Top high-yield savings accounts | About 4.1% to 4.35% APY |
| S&P 500, long-term average since 1928 | About 10% a year (about 6.6% after inflation) |
Stock returns vary a lot from year to year, and the long-term average includes years with big losses. A return that beats a high-yield savings account with less risk can be a good result, while a stock portfolio that trails the S&P 500 for many years may be worth reviewing, especially if fees are high.
Finding the return you need
Choose “The return I need to reach a goal” to work backward from a target. Say you have $10,000, can add $500 a month, and want $250,000 in 20 years. You’d need a 5.71% annual return.
Here’s what that same plan would grow to at different returns:
| Annual return | Value after 20 years |
|---|---|
| 4% (high-yield savings) | $203,832 |
| 7% (cautious stock assumption) | $292,465 |
| 10% (S&P 500 long-term average) | $426,405 |
If the return you need is higher than about 10%, your plan depends on beating the stock market’s long-term average, which most investors don’t. Saving more each month or allowing more time is usually a safer fix than taking on more risk.
What can lower your real return
- Inflation: a 5.88% return with 3% inflation grows your buying power by only about 2.8% a year. Open the inflation setting to see your real return.
- Fees: fund expense ratios and advisory fees come straight out of your return. Enter the value after fees to see what you actually earned.
- Taxes: gains in a taxable account may be taxed when you sell or receive dividends. Tax-advantaged accounts like a 401(k) or IRA can help.
To project how an investment could grow in the future, use our compound interest calculator. To check whether you’re saving enough to retire, try our retirement calculator.
Frequently asked questions
How do I calculate my investment return?
For total return, subtract what you invested from the current value and divide by what you invested. For annualized return on a single investment, use (ending value ÷ starting value)^(1 ÷ years) − 1. If you added money over time, use the calculator, which solves for the rate that matches your deposits.
What is a good annual return on investment?
It depends on the risk you took. Top high-yield savings accounts pay around 4% with almost no risk, while the S&P 500 has averaged about 10% a year since 1928, or about 6.6% after inflation, with large swings along the way.
What is the difference between ROI and annualized return?
ROI is your total gain as a percentage of what you invested, regardless of time. Annualized return spreads that gain into a yearly compound rate. For example, $10,000 that grows to $25,000 in 8 years has a 150% ROI but a 12.14% annualized return.
What is CAGR?
CAGR, or compound annual growth rate, is the yearly rate at which an investment would have grown if it grew at a steady pace. It’s calculated as (ending value ÷ starting value)^(1 ÷ years) − 1.
What is a real rate of return?
A real return is your return after inflation. Divide 1 plus your return by 1 plus the inflation rate and subtract 1. A 5.88% return with 3% inflation is a real return of about 2.8%.
This calculator provides estimates for educational purposes only and is not financial or investment advice. Sources: The Motley Fool: S&P 500 annual returns; NerdWallet: savings account rates.