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ROI Calculator
ROI measures how much an investment earns relative to what you put in. Enter the initial investment, final value and holding period, and this calculator shows the net gain, the total ROI and the annualized return (CAGR) so you can compare investments of different lengths.
Results
Net gain / loss
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Return on investment (ROI)
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Annualized return (CAGR)
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How it works
Return on investment answers the simplest question in finance: how much did I make compared with what I put in? The formula is ROI = (final value - initial investment) / initial investment, shown as a percentage. A $10,000 investment that grows to $15,000 has made $5,000, a 50 percent ROI. The weakness of ROI is that it ignores time: 50 percent in one year is excellent, while 50 percent in twenty years is mediocre. That is why this calculator also shows the compound annual growth rate (CAGR), which converts the total return into a smooth yearly rate: CAGR = (final / initial)^(1/years) - 1. The 50 percent five-year return above equals about 8.45 percent per year. Use CAGR when comparing investments held for different periods, and ROI for a quick snapshot. Neither measure accounts for risk, volatility, fees, taxes or inflation, so a higher ROI is not automatically a better investment. Also keep in mind that ROI counts only the start and end values; dividends, rent or other cash flows in between should be added to the final value for an accurate picture.
Frequently asked questions
How is ROI calculated?
(Final value - initial investment) divided by initial investment, multiplied by 100. A rise from $1,000 to $1,500 is a 50 percent ROI.
What is the difference between ROI and CAGR?
CAGR (compound annual growth rate) smooths the return into a per-year rate, so a 50 percent return over 5 years is about 8.45 percent CAGR. ROI alone ignores how long the money was invested.
Can ROI be negative?
Yes. If the final value is below your investment, the formulas return a negative gain and a negative ROI.
Does ROI include fees and taxes?
No. Fees, taxes on gains and inflation all reduce real-world returns, so compare this result with net figures when making decisions.