ROI Calculator (Return on Investment)
Calculate return on investment as a percentage and annualized return. Compare investments fairly by adjusting for the holding period.
What this calculates
ROI is the most universal investment metric: how much did you make relative to what you put in? Simple ROI alone is misleading because it ignores time — doubling money in 1 year is very different from doubling it in 20. This calculator shows total ROI plus the annualized (CAGR) figure so you can compare investments of different durations apples-to-apples.
Formula & how it works
ROI = (final_value − initial_investment) ÷ initial_investment × 100. Annualized return (CAGR) = ((final/initial)^(1/years) − 1) × 100. CAGR answers 'what constant yearly rate would have produced this result?' — the right number for comparing across different time spans.
Worked example
Invested $10,000 in 2021, worth $15,000 in 2026 (5 years). Total ROI = (15 000 − 10 000) ÷ 10 000 = 50 %. CAGR = (1.5)^(1/5) − 1 ≈ 8.45 % per year. A different investment that returned 30 % over 2 years gives CAGR = 1.3^0.5 − 1 ≈ 14 %/year — actually a better return rate despite the smaller total gain.
Frequently asked questions
Why use CAGR instead of average return?
Average yearly return ignores compounding. CAGR is the geometric mean — the constant rate that gives the same final result. Two years of +50 % and −50 % averages 0 %, but CAGR is −13.4 %/year because $1 → $1.50 → $0.75.
Does ROI include dividends or fees?
Use total final value including reinvested dividends, and use the actual amount you paid including fees and commissions as the initial investment. Otherwise the number is optimistic.
What's a 'good' ROI?
S&P 500 has averaged ~10 % nominal / ~7 % real CAGR over a century. Bonds historically 4–5 %. Real estate (after expenses) around 3–4 % real. Anything well above ~10 % long-term should make you ask 'what's the risk?'
Does this account for inflation?
No — the result is nominal. Subtract average inflation from CAGR for a real return estimate. A 7 % CAGR during a period of 3 % inflation is a real return of ~4 %.
Disclaimer: Informational only — not investment advice.