Investment Return Calculator
Return
+50%
Gain of $5,000.00
- Total invested$10,000.00
- Current value$15,000.00
How this was worked out
- Capital in$10,000.00 invested + $0.00 added = $10,000.00
- Gain$15,000.00 − $10,000.00 = $5,000.00
- As a percentage$5,000.00 ÷ $10,000.00 = 50%
- Per year8.45% a year, weighting anything added at the midpoint (Modified Dietz)
This measures what already happened. It is not a prediction and not a recommendation. Nothing above is adjusted for inflation, so a figure from years ago is being compared with today’s money, and platform fees, trading costs and tax all come out of the percentage before any of it reaches you. The annualised rate also assumes anything you added arrived steadily across the period; if you put a large sum in near the end, the true return is lower than it reads, and near the start, higher.
Money you added is treated as capital rather than as gain, and is weighted at the midpoint of the period — the Modified Dietz method, the standard way to annualise a return when only the period total is known rather than the date of each payment. With nothing added it is an ordinary compound growth rate.
The worked examples below are in US dollars. The tool itself works in whichever currency you pick above, and never converts between them — what you type is what it does the arithmetic on.
Two different questions about the same investment
"How much did I make?" and "how fast did it grow?" have different answers, and confusing them is how a mediocre investment gets talked about as a good one. A 50% total return sounds strong until you learn it took eleven years. This calculator reports both: the total return on everything you put in, and the annualised rate — the CAGR — that produced it.
It works for a fund, a share holding, a property, or any position where you know what went in, what it is worth now, and how long it has been held.
A worked example: $10,000 into $15,000
Put in $10,000, add $2,000 along the way, and the position is now worth $15,000. Total invested is $12,000, so the gain is $3,000 and the return is +25.00%. Without those extra contributions the same $15,000 would represent a $5,000 gain on $10,000 — a 50% return. The money you added is not profit, and counting it as profit doubles the apparent result.
The annualised figure answers the second question. Over the five years, that $3,000 gain was earned on the opening $10,000 plus, on average, half of the $2,000 added along the way — $11,000 of capital at work. That is a 27.3% return for the whole period, and the constant yearly rate that compounds to it is 1.273^(1÷5) − 1 = 4.94% a year. With nothing added, the same sum is ordinary compound growth: $10,000 becoming $15,000 in five years is (15,000 ÷ 10,000)^(1÷5) − 1 = 8.45% a year.
The two formulas, and where they part company
Total return is (final value − total invested) ÷ total invested × 100, where total invested is the opening amount plus anything added. The annualised return takes the same gain and divides it by the average capital at work — the opening amount plus half of what was added, since money that arrived during the period was only working for part of it — then turns that into a yearly rate: (1 + gain ÷ average capital)^(1 ÷ years) − 1. This is the Modified Dietz method. With nothing added it is exactly the compound annual growth rate, (final ÷ initial)^(1 ÷ years) − 1.
Why not simply use that growth rate? Because once money has been added, the growth of the balance is not a return: it counts every contributed dollar as if the market had produced it. Invest $10,000, add $5,000 and finish at $15,000, and the balance grew 8.45% a year on an investment that earned nothing at all. So the contributions come out of the gain here. What the tool cannot know is when they arrived, so it assumes steadily: a large sum added near the end means the true return is lower than shown, and near the start, higher.
Limits worth knowing
An annualised rate describes a straight line between two points and says nothing about the path. An investment that fell 40% and recovered shows the same rate as one that drifted up smoothly, which matters if you plan to sell at a date you do not choose.
Nothing here accounts for tax on dividends or gains, platform and fund fees, transaction costs, or currency movement on foreign holdings. Nor does it adjust for inflation: an 8.45% nominal return with 2.5% inflation is roughly 5.8% in real terms, and it is the real figure that tells you whether the money grew in purchasing power.
For a genuinely mixed cash flow — money going in and out at irregular dates — the technically correct measure is the money-weighted return, or IRR, which this tool does not compute. The midpoint method is a close approximation over a few years; over long periods with additions that are large relative to the opening balance it reads somewhat low, so treat the annualised figure as indicative there.
Annual rates, dividends and what counts as good
Why is the annual rate lower than the total return divided by the years?
Because growth compounds. A 50% gain over five years is not 10% a year — 1.1^5 is 1.61, which would be a 61% gain. The rate that actually produces 50% over five years is 8.45%, and dividing instead of taking the root always flatters the result.
Should dividends be included?
Yes, if they were reinvested — the current value already reflects them. If dividends were taken as cash, add them to the final value, or the calculation will report the price return and quietly ignore the income, which for many holdings is a large part of the total.
What counts as a good annualised return?
It depends on what you compare against. The fair benchmark is what the same money would have earned in a comparable alternative over the same dates — a broad index fund for shares, a savings rate for cash — and long-run stock market returns differ a great deal by country and by which decades are measured. A figure far above your benchmark deserves a look at how much risk produced it.
Can an annualised return be negative?
Yes, and the arithmetic does not change. A holding that fell from $10,000 to $8,000 over four years has a CAGR of −5.4% a year.
What is the difference between a time-weighted and a money-weighted return?
A time-weighted return measures the investment and ignores when money was added, which is how funds are required to report performance. A money-weighted return, the IRR, measures your experience of it, because a large contribution made just before a good year genuinely earned you more. The annualised figure here approximates the second: it counts what you added as capital and assumes it arrived steadily across the period.