Investment Return Calculator (CAGR)
Calculate the compound annual growth rate (CAGR) of your investment, total return, and visualize the growth trajectory over time.
Growth Trajectory
Year-by-Year Breakdown
| Year | Start Balance | Contribution | Growth | End Balance |
|---|---|---|---|---|
| 1 | $10,000.00 | $0.00 | $959.58 | $10,959.58 |
| 2 | $10,959.58 | $0.00 | $1,051.66 | $12,011.24 |
| 3 | $12,011.24 | $0.00 | $1,152.58 | $13,163.82 |
| 4 | $13,163.82 | $0.00 | $1,263.18 | $14,427.00 |
| 5 | $14,427.00 | $0.00 | $1,384.39 | $15,811.39 |
| 6 | $15,811.39 | $0.00 | $1,517.23 | $17,328.62 |
| 7 | $17,328.62 | $0.00 | $1,662.82 | $18,991.44 |
| 8 | $18,991.44 | $0.00 | $1,822.39 | $20,813.83 |
| 9 | $20,813.83 | $0.00 | $1,997.26 | $22,811.09 |
| 10 | $22,811.09 | $0.00 | $2,188.91 | $25,000.00 |
Measuring Investment Performance with CAGR
The compound annual growth rate provides the most meaningful single number for evaluating long-term investment performance. Unlike simple averages that can be distorted by volatile years, CAGR tells you the steady annual rate that would replicate your actual outcome. Use it to compare different investments, evaluate fund managers, or set realistic expectations for your financial plan.
Understanding Your Investment Performance
Why Annual Contributions Change the Picture
Using CAGR to Set Future Expectations
Frequently Asked Questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It represents the constant annual rate of return that would take an investment from its initial value to its final value over a given time period. It smooths out volatility to give you a single annualized growth figure.
How does CAGR differ from average annual return?
Average annual return is the arithmetic mean of yearly returns, which can be misleading due to volatility drag. CAGR is the geometric mean — it accounts for compounding and tells you the actual equivalent annual rate. CAGR is generally more accurate for evaluating long-term performance.
How do annual contributions affect the CAGR calculation?
When you add annual contributions, a simple CAGR formula no longer applies. The calculator uses a numerical method (Newton's method) to find the rate at which your initial investment plus annual contributions would grow to the final value. This gives a more realistic picture of your portfolio's performance.
Can CAGR be negative?
Yes. If your final value is less than your initial investment (plus contributions), the CAGR will be negative, indicating your investment lost value on an annualized basis.