Cumulative Return: Overview, Calculation, Example

By Kristi Waterworth – Updated Apr 24, 2025 at 3:20 PM

Key Points

Cumulative return calculates total gain by (Current Value - Initial Cost) / Initial Cost.
It provides a straightforward way to gauge investment growth over time.
Use both cumulative and annualized returns to gain deeper insights into investment performance.

When you became an investor, you probably realized there would be some math involved, but for many, the sheer amount and variety of possible calculations can be wildly intimidating. Fortunately, you don't have to use them all; instead can just choose the ones that make the most sense for your investment goals. The cumulative return is a basic and important formula all investors should consider every time they review their portfolios.

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A dial showing return on investment when risk is set. — Image source: Getty Images.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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