Rate of Return Calculator
Calculate how effectively an investment has grown by comparing the ending value to the starting capital and stretching that gain across years. This calculator surfaces both the total rate of return and the compound annual growth rate (CAGR), so you can see the performance over the entire holding period and the smoothed annual outcome.
The formula for the total rate of return is (Ending Value − Initial Investment) ÷ Initial Investment, while CAGR is (Ending Value ÷ Initial Investment)^(1 ÷ Years) − 1. Use realistic inputs like the ones shown below to understand how your portfolio evolves.
- Initial Investment: 10,000
- Ending Value after 3 years: 13,500
- Years: 3
This scenario shows a total rate of return of 35%, which translates into an annualized gain near 10.7% thanks to compounding.
Understanding the Outputs
The total rate of return tells you the raw percentage gain or loss over the entire horizon. If you want to compare multiple investments with different horizons, the compound annual growth rate is more useful because it normalizes the return to a yearly rate. When you plug in the numbers above, the calculator first validates that every field contains a number greater than zero before performing the math to avoid misleading answers.
Use these metrics to contrast portfolio strategies, compare managed funds, or benchmark a private project. Always double-check that the ending value includes reinvested dividends or net proceeds to keep the rate honest.