Investing

Investment Return Calculator

Calculate CAGR, total ROI, and annualised returns on any investment. Compare bear, base, and bull scenarios, view year-by-year growth charts, and see inflation-adjusted real returns.

CAGR Calculator ROI Calculator Scenario Comparison Inflation Adjusted Fee Impact Analysis Free Forever

Investment Parameters

$
$
%
ASX 200 long-run avg: ~9.5% | S&P 500: ~10.5%
years
%
%
Used for bear/bull scenario comparison
% p.a.
ETF index funds: 0.07-0.2% | Active funds: 0.5-1.5%
Final Portfolio Value
$0
After 20 years at 9% p.a.
Total Invested
$0
Total Gain
$0
Total ROI
0%
CAGR
0%
Real Value (Inflation-Adj.)
$0
Total Fee Drag
$0

Portfolio Growth Over Time

Scenario Comparison

Bear Case
6%
$0
Gain: $0
Base Case
9%
$0
Gain: $0
Bull Case
12%
$0
Gain: $0

Year-by-Year Breakdown

YearOpeningContributionsReturnFeesClosingReal Value

Understanding Investment Returns

The mathematics and concepts behind measuring investment performance.

CAGR Formula

Compound Annual Growth Rate (CAGR) smooths out year-to-year volatility to show a single consistent annual growth rate. It is the standard measure for comparing investment performance.

CAGR = (End Value / Start Value)^(1/n) - 1 Where: End Value = Final portfolio value Start Value = Initial investment n = Number of years Example: $10,000 grows to $25,937 in 10 years CAGR = (25937/10000)^(0.1) - 1 = 2.5937^0.1 - 1 = 10.00% p.a.

Note: CAGR assumes no additional contributions. When regular contributions are made, the effective return is better measured by XIRR (internal rate of return).

Real Return (Inflation-Adjusted)

Nominal returns show how much your money grew in dollar terms. Real returns show how much your purchasing power grew -- which is what actually matters for long-term wealth.

Real Return = ((1 + Nominal) / (1 + Inflation)) - 1 Fisher Equation (simplified): Real Rate ≈ Nominal Rate - Inflation Rate Example: Nominal return: 9% p.a. Inflation: 2.5% p.a. Real return: ~6.5% p.a. $56,044 nominal value after 20 years = $34,197 in today's purchasing power

The Impact of Fees

Management fees (MER) are deducted annually. Over long periods, even small fee differences compound into large amounts.

Net Return = Gross Return - MER Fee Drag Example ($10,000, 9% gross, 20yr): 0.07% MER (Vanguard ETF): $55,123 0.20% MER (Index fund): $53,066 0.85% MER (Active fund): $47,084 1.50% MER (Managed fund): $41,772 Difference (0.07% vs 1.50%): $13,351

This is why low-cost index funds consistently outperform most actively managed funds over long periods.

Historical Return Benchmarks

Asset ClassCAGR (Long-Run)
ASX 200 (incl. dividends)~9.5%
S&P 500 (USD, incl. dividends)~10.5%
Global equities (MSCI World)~8.5%
Australian residential property~6.5-7%
Australian bonds (AGBs)~4-5%
Cash / High-interest savings~3-4%

Historical returns do not guarantee future performance. All figures are approximate long-run averages.

Frequently Asked Questions

What is CAGR and why does it matter?
CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it grew at a steady annual rate, compounding each year. It is the standard measure for comparing investment performance across different time periods and asset classes. A 10% CAGR means your investment doubles approximately every 7.2 years (Rule of 72).
What is a good annual return on investment in Australia?
The ASX 200 has delivered approximately 9-10% per year including dividends over the long run. A diversified portfolio of Australian and international equities might reasonably target 8-10% nominal returns. After inflation (currently around 3%), real returns of 5-7% are considered strong. Returns above 15% CAGR over a decade are exceptional and typically involve higher risk.
What is the difference between ROI and CAGR?
ROI (Return on Investment) is a simple total percentage gain: (Final Value - Initial Value) / Initial Value. It does not account for time. CAGR annualises the return to show a per-year figure, making it comparable across different holding periods. A 100% ROI over 10 years is a 7.2% CAGR. The same 100% ROI over 5 years is a 14.9% CAGR.
How do management fees affect investment returns?
Fees compound against you over time. A 1% annual fee on a $100,000 portfolio growing at 9% will cost you approximately $80,000 over 20 years compared to a 0.1% fee fund. This is why low-cost index ETFs (typically 0.07-0.20% MER) have such a significant long-term advantage over actively managed funds (typically 0.8-1.5% MER).
What is the Rule of 72?
The Rule of 72 is a quick mental calculation to estimate how long it takes for an investment to double. Divide 72 by the annual return rate: at 9% p.a., money doubles in 72/9 = 8 years. At 6%, it doubles in 12 years. At 12%, it doubles in 6 years.
Should I include dividends in my return calculation?
Yes, always use total return (capital gains + dividends reinvested) when comparing investments. For the ASX 200, dividends historically contribute around 4% of the total 9-10% annual return. Ignoring dividends significantly understates actual investment performance.

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