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ROI Calculator

Calculate your return on investment (ROI) and annualized ROI (CAGR) for any investment. Compare performance across different time periods with instant results.

Investment Details

ROI

50.00%

Net Profit

$5,000.00

Annualized ROI (CAGR)

14.47%

over 3 years

Total Return (Multiple)

1.50x

ROI vs Annualized ROI: Why Both Matter

Total ROI tells you the percentage gain on an investment, but it doesn't tell you how efficient that gain was over time. A 100% ROI sounds impressive — but if it took 20 years, the annualized return is only 3.53% per year, which barely beats inflation.

Annualized ROI (also called CAGR — Compound Annual Growth Rate) converts your total return into an equivalent yearly rate. This is the standard way professionals compare investments across different time periods. Formula: CAGR = (Final/Initial)^(1/years) − 1.

For example, an investment that grew from $10,000 to $15,000 in 3 years has a 50% total ROI and a 14.47% annualized ROI — meaning it grew at the same pace as a savings account returning 14.47% every year for 3 years.

ROI FAQs

How do I calculate ROI?
ROI = (Final Value − Initial Investment) ÷ Initial Investment × 100. If you invested $10,000 and it grew to $15,000, your ROI is ($15,000 − $10,000) ÷ $10,000 × 100 = 50%. This is the simple, total ROI over the entire period.
What is a good ROI?
It depends on the investment type and risk level. Stock market investments historically return 7–10% annually (adjusted for inflation). Real estate might return 8–12%. A business investment with 20–30% ROI is generally considered strong. The "good" threshold also depends on how long the money is invested.
What's the difference between ROI and annualized ROI?
Simple ROI is the total return over the entire investment period, regardless of duration. Annualized ROI (CAGR — Compound Annual Growth Rate) converts the total return into an equivalent yearly rate. This allows fair comparison between investments of different durations.
Why use annualized ROI?
A 50% ROI sounds great, but if it took 5 years, the annualized return is only about 8.45% per year. Compare this to another investment with 30% ROI over 2 years, which is 14.02% annualized. Annualized ROI lets you compare apples to apples across different time horizons.
Does ROI account for risk?
No, simple ROI doesn't account for investment risk, volatility, or the time value of money (beyond the annualized calculation). More sophisticated metrics like risk-adjusted return or Sharpe ratio factor in risk. For personal financial decisions, compare ROI in context of the risk involved.
Can ROI be negative?
Yes, ROI is negative when the final value is less than the initial investment — meaning you lost money. For example, if you invested $10,000 and it declined to $7,000, your ROI is −30%. This calculator correctly handles negative ROI scenarios.

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