Investment ROI Calculator — Annualised Return
Enter the initial investment, final value, and holding period. CalcWize returns total return (the headline number) and the compound annual growth rate (CAGR) — what most investors actually compare. A 60% return over 8 years isn't the same as 60% in 2; CAGR makes them comparable.
Headline return vs. CAGR
Headline return is just (final − initial) / initial. CAGR converts it into an annualised rate as if the investment grew at a steady pace each year. CAGR is what you compare across investments — it's the apples-to-apples figure.
A worked example
Investment A: $10,000 → $16,000 over 8 years. Headline return is 60%, CAGR is 6.05%. Investment B: $10,000 → $16,000 over 2 years. Same headline return — but the CAGR is 26.49%. B grew over four times faster on a per-year basis. Use CAGR to compare; use headline return only when the holding periods are identical.
What CAGR doesn't tell you
CAGR smooths out the journey — it doesn't say anything about volatility along the way. Two investments can have the same CAGR but very different ride: one trundling up steadily, one swinging through 50% drawdowns before recovering. For risk-adjusted comparisons you also need to look at standard deviation, max drawdown, or Sharpe ratio — none of which CalcWize calculates here.
Inflation and tax
A 7% nominal CAGR in a 3% inflation world is a 4% real CAGR — that's your actual purchasing-power gain. Capital-gains tax further erodes the after-tax outcome on the way out (US 0/15/20%, UK 10/20%, ZA 40% inclusion, etc.). For meaningful comparisons across long horizons, deflate by inflation and account for the appropriate capital-gains regime in your jurisdiction.
Frequently asked questions
- What’s the difference between total return and CAGR?
- Total return is the headline gain regardless of time; CAGR is the steady annual rate that would produce it. Always compare investments by CAGR — a 60% return over 8 years is far weaker than 60% in 2.
- Does CAGR show risk?
- No. It smooths over the journey, so two investments with the same CAGR can have very different volatility. For risk, look at maximum drawdown and standard deviation.
- Does it handle contributions or withdrawals along the way?
- No — it assumes a single initial amount and a single final value. For cash flows in between, you need a money-weighted return (IRR).
How we calculate it
Total return is (final − initial) ÷ initial. CAGR — the compound annual growth rate — annualises that figure: CAGR = (final ÷ initial)^(1 ÷ years) − 1. CAGR is the like-for-like number to compare investments held for different lengths of time.
What it doesn't do
- Investments with mid-period contributions or withdrawals (we assume one initial sum)
- Tax on capital gains (use the Tax Estimator for that, separately)
Last reviewed: 2026-05