Tool
Plug in what you paid and what you got back. See your real annualized return and how it stacks up against the market.
| Benchmark | Annual Return | vs. Yours |
|---|
Say you put in $100K and five years later it's worth $250K. That's a 150% total return, which sounds great. But that number alone doesn't tell you much -- you can't compare it to someone who held for 3 years or 10 years. It's just a lump sum figure with no time context.
CAGR (Compound Annual Growth Rate) fixes this by telling you the equivalent steady annual growth rate that would take your starting amount to the ending amount over that time period. In this case, it works out to about 20.1% per year. Now you have a number you can actually compare against other investments, index funds, or even a savings account.
Numbers in isolation don't mean much. A fund advertising "300% returns over 15 years" sounds incredible until you realize that's roughly 10% annualized -- about what the S&P 500 does on average. The benchmark table above helps you see where you really stand. If your CAGR doesn't beat inflation (~2%), you're actually losing purchasing power over time, even though your account balance went up.
For most long-term investors, consistently beating 8-10% annually is genuinely hard. If your number is in that range, you're doing well. If it's significantly higher, it's worth asking whether the extra return came with extra risk you might not want to repeat.