What is a good rate of return on investments?

The S&P 500 has averaged approximately 10% annually before inflation (7% after inflation) over the long run. A diversified stock/bond portfolio might average 6-8% annually. Most financial plans use 6-7% as a conservative estimate for a balanced portfolio, and 8-10% for stock-heavy portfolios.

CAGR (Compound Annual Growth Rate) is the year-over-year growth rate of an investment over a specified period. Unlike a simple average, CAGR accounts for the compounding effect. Formula: CAGR = (Ending Value / Beginning Value)^(1/Years) - 1. A $10,000 investment growing to $25,000 over 10 years has a CAGR of 9.6%.

How is rate of return different from interest rate?

Interest rate usually refers to a guaranteed fixed rate (like a savings account or bond coupon). Rate of return is a broader term that includes realized gains, dividends, and price appreciation on investments. It's calculated after-the-fact on actual results, while interest rates are stated upfront.

What is the rule of 72?

The Rule of 72 is a quick mental math shortcut: divide 72 by your annual return rate to estimate how many years it takes to double your money. At 6%, money doubles in 12 years. At 9%, it doubles in 8 years. At 12%, it doubles in 6 years.

Rate of Return Calculator 2026

Last updated: September 2026 · 2026 IRS & state tax rates

Calculate your investment's compound annual growth rate (CAGR). Enter your starting value, ending value, and holding period to see your annualized return.

Calculation Mode

Starting Value (Initial Investment)

Ending Value (Current / Final Value)

Monthly Contribution

Investment Period (Years)

9.60%

Annual Rate of Return (CAGR)

$10,000 → $25,000 over 10 years

$15,000

Total Gain

150%

Total Return

7.5 yrs

Doubles Every

Initial Investment$10,000

Final Value$25,000

Time Period10 years

Rule of 72 (doubles in)7.5 years

CAGR9.60%

Historical Rate of Return Benchmarks

Knowing your CAGR is only useful if you have a benchmark. Here are historical average annualized returns (approximate, before taxes):

S&P 500: ~10.5% (1926–2024), ~7.5% inflation-adjusted
US Total Stock Market: ~10% annually long-term
60/40 Portfolio: ~8% annually
10-Year Treasury Bond: ~4-5% current yield
High-Yield Savings: 4-5% (2024-2026)
US Real Estate: ~4-6% annually (price appreciation only)
Payroll Taxes Guide
Overtime Rules
Tax Withholding Guide

The Power of Compounding

At 10% CAGR, $10,000 becomes: $25,937 in 10 years, $67,275 in 20 years, $174,494 in 30 years. The last 10 years generate more than the first 20 combined — which is why starting early matters far more than the amount.

Understanding Rate of Return on Investments

Rate of return (RoR) measures how much an investment gains or loses as a percentage of the original cost. It is the core metric for comparing investments across different asset classes, time periods, and amounts.

Simple RoR vs CAGR

Simple rate of return = (Ending Value − Beginning Value + Income) ÷ Beginning Value. A $10,000 investment growing to $12,500 = 25% simple return.
CAGR (Compound Annual Growth Rate) accounts for time: (Ending ÷ Beginning)^(1/Years) − 1. The same growth over 3 years = 7.72% CAGR — a more accurate measure for multi-year comparisons.

Historical Returns by Asset Class

Asset Class	Avg. Annual Return
US Stocks (S&P 500)	~10% nominal / ~7% inflation-adjusted
US Bonds (10-yr Treasury)	~4.5% historical average
High-Yield Savings (2026)	4.5%–5.2%
Real Estate (REITs)	~8%–12% historical

Asset Class

Avg. Annual Return

US Stocks (S&P 500)

~10% nominal / ~7% inflation-adjusted

US Bonds (10-yr Treasury)

~4.5% historical average

High-Yield Savings (2026)

4.5%–5.2%

Real Estate (REITs)

~8%–12% historical