Investment Return Calculator (ROI)

Investment return and CAGR (Compound Annual Growth Rate) measure how well an investment has performed and how to compare investments of different durations on an equal basis.

Total return formula: Total Return (%) = ((Ending Value − Starting Value + Dividends) ÷ Starting Value) × 100

CAGR formula: CAGR = (Ending Value ÷ Starting Value)^(1 ÷ Years) − 1

CAGR answers: “What single annual growth rate, compounded every year, would produce the same total result?”

Rule of 72 (quick mental math for doubling time): Years to Double ≈ 72 ÷ Annual Return (%)

At 8% CAGR: 72 ÷ 8 = 9 years to double At 12% CAGR: 72 ÷ 12 = 6 years to double

Real return (inflation-adjusted): Real Return = ((1 + Nominal Return) ÷ (1 + Inflation Rate)) − 1

Historical US inflation: ~3% average long-term. A 10% nominal return in a 3% inflation environment yields a real return of: (1.10 ÷ 1.03) − 1 = 6.8% real return.

Benchmark CAGR reference values:

• US S&P 500 (1926–2024): ~10.0% nominal CAGR (~7% real)
• Global stocks (MSCI World, 1970–2024): ~8.5% nominal CAGR
• US bonds (10-year Treasury, long-term avg): ~4–5% nominal
• Gold (1971–2024): ~7.8% nominal CAGR
• US real estate (Case-Shiller, 1987–2024): ~4.5% nominal CAGR
• Savings account (current, 2024): 4–5% (high-rate environment); normally 0.5–2%

Worked example: You invested $15,000 in an index fund 7 years ago. It’s now worth $26,450. You also received $1,200 in dividends over that period (reinvested).

• Total ending value (with reinvested dividends): $26,450
• Total return: ($26,450 − $15,000) ÷ $15,000 × 100 = 76.3%
• CAGR: ($26,450 ÷ $15,000)^(1/7) − 1 = (1.7633)^0.1429 − 1 = 1.0845 − 1 = 8.45% CAGR

Versus benchmark: S&P 500 CAGR over same period was approximately 11.5% — the investment underperformed by about 3% per year, costing ~$5,000 in missed gains over 7 years.