Average Rate of Return Calculator — Find the True Return on Any Investment

TL;DR

• Enter your starting value, ending value, and years held in the Average Rate of Return Calculator to get your CAGR and total return instantly
• CAGR (compound annual growth rate) is the accurate measure: it accounts for compounding, unlike simple average return
• 7% CAGR is a commonly used benchmark for long-term inflation-adjusted stock market performance
• The calculator handles negative returns: an ending value below the starting value produces a negative CAGR
• Runs entirely in your browser: no account or signup needed

The Average Rate of Return Calculator shows how an investment performed on an annual basis. Enter the starting value, ending value, and years held. The calculator returns the total return percentage, the simple average annual return, and the CAGR.

How to Use the Calculator

Enter the amount originally invested. Enter the current value, or the amount received if the investment was sold. Enter how many years it was held. The calculator shows three figures: total return as a percentage, the simple average annual return (total gain divided by years), and CAGR, which is the annual rate that compounded each year would have produced the exact same result.

When to Use This Calculator

Reviewing past performance: Calculate the CAGR on a stock or fund held for several years and compare it to an index benchmark like the S&P 500.

Comparing investments: Two investments grew by the same percentage over different time periods. CAGR converts both to the same annual rate so the comparison is fair.

Real estate: Enter the purchase price and the sale price to find the annualized return. Add net rental income to the ending value for a fuller figure.

Retirement planning: Use a projected annual return rate to estimate how a lump sum will grow over 20 or 30 years.

Frequently Asked Questions

What is the difference between simple return and CAGR? Simple average annual return divides the total gain by the number of years and ignores compounding. CAGR finds the single annual percentage that, compounded each year, produces the actual outcome. CAGR is the more useful figure when comparing investments held over different time periods.

What is a good average rate of return? The S&P 500 has returned around 10% per year in nominal terms historically, or roughly 7% after inflation. Individual stocks, real estate, and other assets vary widely. A consistent 7-10% CAGR over many years is considered a strong long-term result for a diversified portfolio.

Can this calculator handle negative returns? Yes. If the ending value is lower than the starting value, the calculator shows a negative total return and a negative CAGR. A CAGR of -8% means the investment lost about 8% of its value per year on a compounded basis.

The calculator is free and all figures are calculated in your browser. No data is stored or sent anywhere.