ROI Calculator
Measure investment performance with ROI and annualized return, from your initial investment and final value.
ROI Calculator — input your values
What does this financial calculator do?
The ROI calculator measures how well an investment performed using the two standard figures: the total return (ROI) and the annualized return (CAGR). You provide the money put in, the final value and how long the investment was held.
The total ROI shows the cumulative gain or loss, while the annualized figure expresses it as a steady per-year rate — the number that lets you compare a 2-year stock pick against a 10-year fund or a savings account.
Formula and variables
CAGR assumes the gain was compounded evenly across the whole period.
| Symbol | Meaning |
|---|---|
| Initial | Money invested at the start |
| Final | Value at the end of the period |
| CAGR | Compound annual growth rate |
Worked example
You invest $10,000 in a fund and it is worth $15,000 after 5 years.
- Profit: $15,000 − $10,000 = $5,000.
- ROI: $5,000 ÷ $10,000 × 100 = 50%.
- CAGR: (15,000 ÷ 10,000)^(1/5) − 1 = 8.45% per year.
Answer: A 50% total return, equal to about 8.45% per year.
Tips and common mistakes
Tips
- Always quote the annualized return when comparing investments of different durations — a 50% return over 10 years is only about 4.1% per year.
- Subtract fees, taxes and inflation from the final value before measuring performance.
- For income-producing investments, add dividends and interest received to the final value.
- Use the annualized figure to compare an investment against index funds, which historically average 7% to 8% per year.
Common mistakes to avoid
- Comparing total returns across different holding periods without annualizing them.
- Forgetting to include dividends, interest and costs, which understates or overstates performance.
- Measuring a short, lucky window as if it represented long-run performance.
ROI Calculator — frequently asked questions
What is the difference between ROI and CAGR?
ROI is the total percentage gain over the whole period. CAGR is the equivalent steady yearly rate: a 50% ROI over 5 years equals about 8.45% per year. CAGR is the fair way to compare different holding periods.
How do I calculate ROI?
Subtract the initial investment from the final value, divide by the initial investment and multiply by 100. A $10,000 investment worth $15,000 gives a 50% ROI.
What is a good ROI?
Context matters. Broad stock index funds average 7% to 8% per year long term; savings accounts pay 2% to 5%; risky private investments should promise far more to justify the risk.
Why is annualized return lower than total return?
Because compounding works in reverse: a total gain of 50% spread over 5 years is 8.45% per year, since 1.0845^5 ≈ 1.5. The longer the period, the bigger the gap.
Does ROI account for taxes and fees?
Not automatically — enter the after-fee, after-tax final value for a true picture. A 50% gross return can drop well below 40% after costs.
Can I use this calculator for rental properties?
Yes. Include the purchase price as the initial investment and the total of sale proceeds plus net rental income as the final value for a full-picture return.