How to Use the Period Return to CAGR Converter
Comparing investments with different holding periods by total return alone can be misleading — a 20% gain in one year and a 20% gain over three years are very different outcomes. Enter your investment period in months and total return, and this calculator converts it into a compound annual growth rate (CAGR), assuming gains are reinvested each year.
CAGR isn't the same as dividing return by time. For example, a 44% gain over two years might look like 22% a year on a simple basis, but the true compounded CAGR comes out closer to 20%. To fairly compare performance across different holding periods, you need to annualize using CAGR rather than simple division.
You can enter a negative total return with a minus sign, and the resulting CAGR will also be negative, showing the annualized rate of loss. Keep in mind that very short holding periods (a few months) can produce annualized numbers that look dramatically larger or smaller than what actually happened, so for short-term results it's worth looking at the raw period return alongside the CAGR figure.
Frequently Asked Questions
Simple division ignores compounding. CAGR assumes annual reinvestment and gives a compound annual growth rate, which lets you fairly compare returns across different holding periods.
Yes, months are converted to years for the calculation, but very short periods can produce annualized figures that look much bigger or smaller than the actual result feels — interpret with care.
Yes, enter a loss with a minus (-) sign, and the resulting CAGR will also come out negative to show the annualized rate of loss.