Investment Return Calculator

Total investment return measures the overall gain or loss on an investment, combining both capital growth and income received. The formula is: total return = (ending value minus beginning value plus income received) divided by beginning value, expressed as a percentage. For example, if you invested $10,000 in shares, they are now worth $11,200, and you received $400 in dividends, your total return is ($11,200 minus $10,000 plus $400) / $10,000 = 16%. This is a simple (non-annualised) return. For investments held over multiple years, it is usually more useful to calculate the annualised return (CAGR) to compare against benchmarks such as the NZX 50 index or term deposit rates. Including income (dividends, interest, rental income) alongside capital gains gives a more complete picture of investment performance. Source: NZX data; Sorted.org.nz.

Nominal return is the headline percentage gain on an investment before accounting for the effects of inflation. Real return adjusts for inflation to show the true increase in purchasing power. The real return formula is: real return = ((1 + nominal return) / (1 + inflation rate)) minus 1. For example, with a nominal return of 7% and NZ CPI inflation of approximately 2.5% in 2025, the real return is ((1.07) / (1.025)) minus 1 = approximately 4.4%. This distinction matters because inflation erodes the value of money over time: a 5% nominal return in a 4% inflation environment means your real purchasing power only grew by about 1%. For long-term NZ investors, comparing investment returns against the CPI is important for evaluating whether your wealth is genuinely growing. Source: Stats NZ CPI data; Sorted.org.nz.

Historical and current (2025) return estimates for major NZ asset classes are approximately as follows. NZX 50 index (NZ shares): approximately 10% per annum nominal total return including dividends over the long term, though with significant year-to-year volatility. NZ government and corporate bonds: approximately 4-5% per annum in the current interest rate environment. Term deposits: approximately 4-5% for a 1-year term at major NZ banks as of 2025. NZ residential property: approximately 8-10% total return per annum including rental yield and capital growth, though this varies significantly by region. International shares (hedged): broadly similar to NZ shares at around 8-12% long-term nominal. These are historical averages; past returns do not guarantee future performance. Source: NZX data; interest.co.nz for current rates; Sorted.org.nz.

CAGR (compound annual growth rate) is the smoothed annual rate of return that would produce the same final value as the actual investment performance over a given period, regardless of year-to-year volatility. The formula is: CAGR = (ending value / starting value) raised to the power of (1 / number of years) minus 1. For example, if $10,000 grows to $16,105 over 6 years, CAGR = (16,105 / 10,000)^(1/6) minus 1 = approximately 8.3% per annum. CAGR is useful because it gives a single comparable number: you can compare a volatile investment that returned 20%, minus 5%, 15%, minus 3%, 12%, 10% across 6 years directly against a term deposit returning a steady 8%. Note that CAGR does not reflect the risk or volatility experienced along the way. Source: NZX data; Sorted.org.nz.