Return on investment calculator
Return measures how much an investment has grown against the money put in: total return covers the whole holding period, while the annualised figure, CAGR, restates that same growth as one year so investments of different lengths compare directly.
- Profit
- €5,000
- Annualised return (CAGR)
- 8.45%
Rates and thresholds
- Total return
- (final value − amount invested) / amount invested × 100
- Profit
- final value − amount invested
- Annualised return (CAGR)
- (final value / amount invested)^(1 / years) − 1
How is return on investment calculated?
Total return is profit divided by the amount invested: (final value − amount invested) / amount invested × 100. If €10,000 has become €15,000, the profit is €5,000 and the return is 50%. The formula ignores how long the money worked, so read the annualised figure alongside it.
What is the difference between total return and CAGR?
50% over five years is not 10% a year but 8.45%, because returns compound: each year's growth is measured from the previous year's closing value. CAGR is the only way to line up investments of different lengths — 30% over three years (9.14% a year) beats 50% over ten (4.14% a year).
What does a return figure leave out?
A return percentage says nothing about risk: two investments that both made 8% a year can differ completely in how safe they were. It also leaves out fees, taxes and inflation — an 8% nominal return with 4% inflation is roughly 4% in real terms. The formula assumes a single deposit at the start; with regular top-ups, IRR is the truer measure.
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