Investment Return Calculator

Total return is the raw percentage change from start to finish, with no adjustment for how much time passed. Annualized return (CAGR) converts that same total gain into an equivalent constant yearly growth rate, so it accounts for the holding period. A 150% total return over 5 years and the same 150% total return over 10 years both start from an identical total gain, but the 5-year investment has a much higher CAGR because it reached that gain in less time.

Because it strips out the effect of holding period length, letting you compare investments of very different durations on equal footing. An investment that doubled in 3 years and one that doubled in 10 years both have a 100% total return, but very different CAGRs (roughly 26% versus 7%), which is the number that actually reflects how fast your money grew each year on average.

No -- CAGR only looks at the starting value, the ending value, and the number of years between them. It assumes smooth compounding the whole way through, so an investment that dropped 30% in year two and then recovered strongly will show the exact same CAGR as one that grew steadily every single year, as long as both reach the same final value from the same starting value over the same time span.

Short time periods amplify the annualized figure because the "1/years" exponent gets large as years shrinks toward zero, projecting a brief gain or loss forward as if it repeated for a full year. A modest 5% gain over just one month, annualized, can translate into a very large annualized percentage -- which is mathematically correct but can be misleading if read as a realistic full-year expectation rather than a short-period result stretched out.