Rate of Return Calculator

Enter your initial investment, final value, income received, and holding period to get the total gain, simple rate of return, and annualized return (CAGR).

Quick Facts

Annualized formula
CAGR = ((Final + Income) / Initial)^(1/Years) − 1
Spreads total gain evenly across the holding period so returns of different lengths can be compared.
Simple formula
(Final + Income − Initial) / Initial × 100
Ignores how long the money was invested — use CAGR to compare across different holding periods.

Your Results

Calculated
Total gain
-
Final value + income − initial investment
Simple rate of return
-
Total gain ÷ initial investment
Annualized return (CAGR)
-
Compound annual growth rate over the period
Growth multiple
-
Ending value (incl. income) per $1 invested

Ready

Enter your initial investment, final value, income received, and holding period, then press Calculate.

How the Rate of Return Calculator works

This tool measures how much an investment actually gained, both in total and per year, from four numbers you already have: what you put in, what it is worth now, any income you took out along the way, and how long you held it. It reports two standard, well-established figures — the simple rate of return and the annualized rate of return (CAGR) — so you can judge a single investment on its own terms and compare it fairly against others held for different lengths of time.

The formulas

For an Initial investment, a Final value, any Income received (dividends or interest paid out and not reinvested), and a holding period of Years:

Simple rate of return = (Final value + Income − Initial investment) / Initial investment × 100

Annualized return (CAGR) = ((Final value + Income) / Initial investment)1/Years − 1, × 100

The simple return tells you the total percentage gain over the whole holding period, with no adjustment for how long that took. CAGR takes the same total growth and spreads it evenly across each year, answering "what constant annual growth rate would have produced this same result?" — which is what makes it useful for comparing a 1-year holding against a 10-year one.

Worked example

Say you invest $10,000, it grows to a final value of $14,000, and along the way you collected $500 in dividends you did not reinvest, over a 3-year holding period. Total gain is $14,000 + $500 − $10,000 = $4,500, for a simple return of $4,500 / $10,000 = 45%. Every dollar invested grew to (14,000 + 500) / 10,000 = 1.45×. Spread over 3 years, that works out to an annualized return of 1.451/3 − 1 ≈ 13.19% per year (CAGR) — a much more modest-sounding, but more comparable, figure than the 45% headline number.

What moves the return most

  • Holding period: the same total gain produces a much higher CAGR over 1 year than over 10 years, because compounding has less time to do the work. A 45% simple return is roughly 45% CAGR over 1 year but only about 13% CAGR over 3 years.
  • Income received: dividends and interest you did not reinvest still count toward total return. Leaving them out understates the true gain.
  • Final value swings: because CAGR uses a root, small changes in final value near a break-even point (final + income ≈ initial) move the annualized percentage sharply — treat CAGR near 0% as noisy.

Simple return, CAGR, and money-weighted return

This calculator assumes a single lump-sum investment held for the full period, with income reported as a total and not reinvested mid-period. That covers most buy-and-hold scenarios cleanly. If you added or withdrew money at different points in time — extra contributions, partial sales, recurring deposits — the CAGR formula no longer applies exactly, because it cannot see when each cash flow happened. Situations like that call for a money-weighted return calculation such as XIRR, which weights each cash flow by the date it occurred.

Frequently Asked Questions

How is the rate of return calculated?
This calculator reports two figures: the simple rate of return, (Final Value + Income − Initial Investment) / Initial Investment × 100, and the annualized rate of return (CAGR), ((Final Value + Income) / Initial Investment)^(1/Years) − 1, × 100. The simple return measures total gain relative to the amount invested; CAGR spreads that gain evenly across the holding period so investments held for different lengths of time can be compared.
What counts as income received?
Income received is cash paid out during the holding period that was not reinvested, such as dividends, interest, or distributions you kept rather than plowed back into the position. If you reinvested every dividend, leave this at 0, since reinvested income is already reflected in the final value.
Why is CAGR different from the simple rate of return?
Simple return ignores how long the money was invested, so a 20% simple return over 1 year and a 20% simple return over 10 years look identical even though the first is far better. CAGR converts both into an equivalent constant annual growth rate, so a $10,000 investment that grew to $14,000 in 3 years (about 13.2% CAGR) can be compared directly with one that grew to $14,000 in 1 year (40% CAGR).
Does this calculator account for taxes, fees, or reinvestment timing?
No. The calculator uses the final value and total income exactly as entered, so fees, taxes, or reinvestment timing must already be reflected in those numbers if you want a net figure. It also assumes a single lump-sum investment and a single ending value; irregular contributions or withdrawals during the period require a money-weighted return calculation such as XIRR rather than this formula.

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