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Rate of Return Calculator
Rate of Return Calculator
Annualized Rate of Return (CAGR):
Total Return:
Understanding the Rate of Return Calculator
When you invest money, one of the first questions that comes to mind is: How much did my investment really grow?
That’s exactly what the Rate of Return Calculator helps you figure out. Instead of just looking at how much more money you ended up with, this tool shows you the annualized return, also called CAGR (Compound Annual Growth Rate).
Why does this matter? Because CAGR gives you a clear picture of how your investment performed on average per year, even if the growth was uneven.
It smooths out the ups and downs and tells you what constant yearly rate would have taken you from your starting value to your final value.
How this calculator works
The calculator only needs three things from you:
- Present Value (PV): the amount you originally invested.
- Future Value (FV): the value of your investment at the end of the period.
- Time Period: the total duration in years, months, and days.
With these, it applies the CAGR formula:
CAGR = (FV / PV)^(1 / T) – 1
Where T is the time in years.
The result tells you your annualized return (%). Alongside that, the calculator also displays your Total Return, which is the overall percentage increase from the beginning to the end.
Why Use This Calculator?
- Compare Investments: Easily check which fund, stock, or deposit gave you better growth.
- Plan Goals: See how fast your money needs to grow to reach a financial target.
- Simplify Complex Returns: CAGR removes the noise of year to year fluctuations.
FAQs
What is a good rate of return?
It depends on the asset. Equity mutual funds may aim for 10–15% over the long term, while fixed deposits usually give 5–7%.
Can CAGR be negative?
Yes, if the final value is lower than the initial investment, the CAGR will show a negative annualized return.
Why use CAGR instead of average returns?
Average returns can be misleading when returns fluctuate. CAGR gives you the real growth rate that connects your start and end values smoothly.
Disclaimer:
This content is for informational purposes only and should not be considered financial advice.
Read full Disclaimer.
