Annualized Return Calculator (CAGR)

Calculate compound annual growth rate (CAGR) and annualized investment returns.

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Annualized Return Formulas: Adjusted Ending Value = Ending Value - Additional Contributions CAGR (Compound Annual Growth Rate): CAGR = [(Ending Value / Beginning Value)^(1 / Years)] - 1 Total Return: Total Return = [(Ending Value - Beginning Value) / Beginning Value] * 100 Simple Average Annual Return: Simple Avg = Total Return / Years Investment Multiple: Multiple = Ending Value / Beginning Value
Example: Beginning Value: $10,000 Ending Value: $15,000 Time Period: 5 years Additional Contributions: $0 CAGR = [($15,000 / $10,000)^(1 / 5)] - 1 = [1.5^0.2] - 1 = 1.0845 - 1 = 0.0845 = 8.45% Total Return = ($5,000 / $10,000) * 100 = 50% Simple Avg = 50% / 5 = 10% per year Multiple = 1.5* The investment grew at 8.45% compounded annually.

What is annualized return (CAGR)?

Compound Annual Growth Rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to ending balance, assuming profits are reinvested annually. It smooths out volatility to show average annual performance.

How is CAGR different from average return?

CAGR accounts for compounding and shows the geometric mean growth rate. Simple average return is arithmetic mean and doesn't reflect actual investment growth. CAGR is more accurate for multi-period returns.

When should I use annualized return?

Use annualized return to compare investments with different time periods, evaluate portfolio performance over multiple years, or compare to benchmarks. Essential for periods longer than one year.

Can CAGR be negative?

Yes, negative CAGR indicates the investment lost value over time. For example, -5% CAGR means the investment decreased by an average of 5% per year compounded.

What's a good annualized return?

Historical S&P 500 returns average ~10% annually. Conservative portfolios: 4-6%, balanced: 6-8%, aggressive: 8-12%. Returns vary by asset class, risk, and market conditions.