If you added money to your investment account regularly — $200 a month, $500 every quarter, any pattern — CAGR cannot accurately measure your return. CAGR requires a single starting value and a single ending value; it has no way to account for contributions that arrived at different times and compounded for different lengths.
The calculator above switches automatically to a money-weighted return (IRR) calculation the moment you enter a monthly contribution amount. IRR finds the annualized rate that makes the present value of all your cash outflows exactly equal to your ending balance — giving you the actual return experience of your specific contribution timing.
Why regular contributions change the return calculation
Consider two investors who both start with $5,000 and end with $50,000 after 10 years. Investor A added nothing. Investor B contributed $200/month for those 10 years (total contributions: $24,000 + $5,000 = $29,000). Investor A's CAGR is simply (50,000/5,000)^(1/10) − 1 ≈ 25.9%. Investor B's simple CAGR calculation would give the same number — but it is wrong, because B invested much more capital and should expect less of a rate-of-return edge.
The correct number for Investor B is the IRR, which accounts for the fact that some contributions were in the account for 10 years and some for only 1 month. For the prefilled scenario ($5,000 + $200/mo for 10y → $50,000), the IRR is approximately 9.07% annualized. The IRR correctly reflects that $29,000 total invested producing $50,000 is roughly a 9% annual return given the timing.
Dollar-cost averaging and how it affects your IRR
Dollar-cost averaging (DCA) — contributing a fixed amount on a regular schedule — means your contributions buy more shares when prices are low and fewer when prices are high. This mechanical response to price variation can produce an IRR that is higher OR lower than the fund's own time-weighted return, depending on when the good and bad years occurred.
If a fund had a bad first 5 years and a great second 5 years, a DCA investor accumulated shares cheaply during the downturn and rode the recovery with a large position — producing an IRR significantly higher than the fund's time-weighted return. The reverse is also true: strong early performance followed by weak performance hurts a DCA investor because they accumulated expensive shares during the good period.
Frequently asked questions
How do I calculate investment return when I've made contributions?
Use the money-weighted return (IRR), not CAGR. In Mode A above, enter your starting investment as "starting value," your regular additions as "monthly contributions," the total holding period, and your current or ending portfolio value. The calculator switches to IRR automatically when contributions are present. This gives you the annualized rate that accounts for when each dollar was invested.
Can I use CAGR when I've been adding money monthly?
Not accurately. CAGR assumes a single lump sum invested at the start and measures only the rate of price appreciation from beginning to end. When you make ongoing contributions, some dollars compound for the full period and some for only a few months. CAGR ignores this timing entirely, producing a misleading rate. IRR (the money-weighted return) is the correct metric.
What is a good return for a regular contribution investment plan?
A money-weighted return (IRR) of 7–10% on a regular contribution plan invested in U.S. equities is a reasonable long-term outcome. Your actual IRR will be pulled by both the underlying market return and the timing of your contributions relative to market performance. Compare your IRR to the S&P 500 total return over the same period as a benchmark.
My portfolio has contributions and withdrawals — which measure should I use?
With both contributions (inflows) and withdrawals (outflows), the money-weighted return (IRR) still applies but requires all cash flows to be entered. The calculator handles the monthly-contribution case; for irregular cash flows, use a spreadsheet's XIRR function, which handles arbitrary dated cash flows. XIRR is the most accurate measure of your personal investment performance when cash flows are irregular.