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Calculate CAGR (Compound Annual Growth Rate) and Money-Weighted Return for investment portfolios. Supports additional contributions (monthly/quarterly/annual) and flexible time periods. Compare your returns against benchmarks like S&P 500, bonds, and real estate. Get detailed performance interpretation and understand the difference between annualized vs. average returns.

Frequently Asked Questions

What is the difference between annualized return and average return?

Annualized return (CAGR) shows the smoothed yearly growth rate accounting for compounding, while average return is a simple mean.

For example: +50% year 1, -30% year 2 gives average return of 10% but annualized return of only 2.47%.

Annualized return better represents actual investment performance and is what investors actually earn.

How do I calculate CAGR with regular contributions?

For regular contributions, use the XIRR (Extended Internal Rate of Return) method which accounts for cash flow timing.

The formula becomes more complex: each contribution grows for different time periods.

Most calculators use iterative methods to solve.

Money-weighted return (MWR) provides the true return accounting for contribution timing.

What is a good annualized return for different asset classes?

Historical averages (1926-2023): Large-cap stocks (S&P 500): 10.3%, Small-cap stocks: 12.1%, Corporate bonds: 5.5%, Government bonds: 5.1%, Real estate (REITs): 9.5%, Gold: 4.9%, Inflation: 3.0%.

Good returns exceed these benchmarks adjusted for risk.

Target 2-3% above inflation as minimum.

Should I use time-weighted or money-weighted returns?

Time-weighted return (TWR) measures investment performance excluding cash flow timing, ideal for comparing fund managers.

Money-weighted return (MWR/XIRR) includes timing impact, showing your actual returns.

Use TWR to evaluate investment selection, MWR to measure personal portfolio performance including your timing decisions.

How does inflation affect annualized returns?

Real return = Nominal return - Inflation rate (approximately).

For exact calculation: (1 + nominal) / (1 + inflation) - 1.

With 10% nominal return and 3% inflation, real return is 6.8%.

Always consider real returns for long-term planning.

Historical US inflation averaged 3% annually.

What return rate should I use for retirement planning?

Conservative planning suggests 5-7% nominal (2-4% real) for balanced portfolios.

Age-based adjustments: Under 40: 8-10% (stock-heavy), 40-55: 7-8% (balanced), Over 55: 5-6% (conservative).

Reduce expectations by 0.5-1% for fees.

Monte Carlo simulations suggest using multiple scenarios rather than single return assumption.

About This Page

Editorial & Updates

  • Author: SuperCalc Editorial Team
  • Reviewed: SuperCalc Editors (clarity & accuracy)
  • Last updated: 2026-01-13

We maintain this page to improve clarity, accuracy, and usability. If you see an issue, please contact hello@supercalc.dev.

Financial/Tax Disclaimer

This tool does not provide financial, investment, or tax advice. Calculations are estimates and may not reflect your specific situation. Consider consulting a licensed professional before making decisions.