Rate of Return Calculator

Want to know how well your investment did? Use this calculator to find the compounded rate of return for a given change in value.
Loading Calculator...
Loading... Answers to What You Seek

This calculator finds the Compound Annual Growth Rate (CAGR) needed to grow (or shrink) a starting balance into an ending balance over a given period of time.  In reality the actual asset's value will fluctuate year to year in varying degrees.  What this calculator does it tell you the fixed interest rate needed to generate the return, just like if you had cash in a savings account that compounded annually and you never touched the balance.  This is useful for apples to apples comparison across assets (eg comparing the return you got on a rental property to the return you got in the stock market).

The compound annual growth rate is useful for figuring the return on a house (hopefully positive), vehicle (typically negative), collectible (??), or other asset.

The equation used for finding the compound annual growth rate:

CAGR = (Ending Balance / Starting Balance)1 / YEARS  -  1

Note that an average rate of return is misleading and pretty much useless for purposes of comparing investments. The compound rate is more realistic because it accounts for the growth of the balance over time.

For example, if an investment of $100 drops by 50% in the first year (drops to $50), and then gains 50% the next year (increases to $75), the 'average' return is zero  (50 + -50) / 2  = 0, which is meaningless.  

However, in that scenario compound rate of return is actually -13.4% as the calculator shows.

 

 

Share this Calculator

To share this calculator by URL or embed it on your own website see the 'Share / Embed' button above next to the results bar after hitting Submit.

If you are interested in customizations or would like to embed our calculators in your site without our branding applied please contact us.

DISCLAIMER: This calculator is provided for educational purposes and should not be considered financial or investment advice. We have checked the equations and code used and we think they are right. However, we offer you no guarantee of accuracy. If you find a bug please let us know so we can fix it for you!
Leave a comment

The Wealth Meta community is based on authentic and insightful discussions. The best comments are when people share their questions, goals, insights, and encouragement. Trolling is not tolerated!

By the way, if you register you'll be able to manage your comments and better participate in discussions!

Required for comment verification. Your email will not be published.