- What is a good CAGR for Australian investments?
- The ASX 200 has delivered a CAGR of roughly 10% per year over the long run (including dividends, before inflation). Australian residential property has averaged 6–8% CAGR over the past few decades, though this varies significantly by location. A CAGR consistently above 10% per year is considered excellent for a diversified portfolio.
- How do I calculate CAGR manually?
- CAGR = (Final Value ÷ Initial Value) ^ (1 ÷ Years) − 1. For example, $10,000 growing to $18,000 over 5 years: (18,000 ÷ 10,000) ^ (1 ÷ 5) − 1 = 1.8 ^ 0.2 − 1 ≈ 0.1247, or 12.47% per year.
- How does this calculator handle additional contributions?
- This calculator treats additional contributions as if they were all invested from the start — a simplification that slightly overstates CAGR when contributions were actually spread over time. For a precise return when you've made regular contributions, you'd need an IRR (Internal Rate of Return) calculation, which accounts for the timing of each cash flow.
- What is the difference between total return and annualised return?
- Total return is the simple percentage gain from start to finish, regardless of how long it took. Annualised return (CAGR) converts that total gain into a per-year figure. A 100% total return sounds impressive, but if it took 20 years it's only 3.5% per year — which barely beats inflation.
- Can I use this calculator for property returns?
- Yes. Enter your purchase price as the initial investment, estimated current market value as the final value, and any renovation costs or capital improvements as additional contributions. Keep in mind the result does not account for rental income, mortgage costs, stamp duty, or CGT — it is a simplified capital growth return only.