🎯 ROI Calculator
Work out your profit, total return and yearly return on any investment.
How it works
ROI — return on investment — is the simplest measure there is: ROI = (amount returned - amount invested) / amount invested x 100. It tells you the total gain as a percentage of what you put in. What it completely ignores is time, and time is where bad comparisons are born. A 50% return earned in one year is outstanding; the same 50% stretched over ten years is about 4.1% a year, which a savings account might have matched.
That gap is why the calculator also gives you CAGR, the compound annual growth rate: CAGR = (end / start)1/years - 1. It is the single steady yearly rate that would carry you from your starting amount to your ending amount. CAGR is the number to compare between investments held for different lengths of time, and the number to hold up against inflation — a CAGR below the inflation rate means you went backwards in real terms, whatever the profit line says.
For an honest figure, put everything you got back into the amount returned: the sale price plus any dividends, rent or interest the investment paid you along the way.
An example
You put in $5,000 and, three years later, you have $7,500 back. The net profit is $2,500.00 and the total ROI is 50.00% — a headline number that sounds the same whatever the timescale.
The CAGR tells the sharper story: 14.47% a year. That is the steady rate which, compounded for three years, turns $5,000 into $7,500. Set against inflation of around 3%, a 14.47% CAGR is a genuinely strong result — your money's buying power grew by roughly 11% a year. Had the same 50% taken ten years instead of three, the CAGR would have shrivelled to about 4.1%, and inflation would have eaten most of it.
Common questions
What counts as a good ROI?
There is no single number — it depends on the time taken and the risk carried. As a yardstick, US shares have returned roughly 10% a year over long stretches before inflation. Anything promising far more than that, quickly and with 'no risk', should be treated as a warning sign rather than an opportunity.
ROI or CAGR — which one should I actually use?
ROI for a quick, honest total on one investment. CAGR whenever you compare: two investments held for different periods, an investment against a savings rate, or anything against inflation. Comparing raw ROIs across different timescales is the most common way people fool themselves about performance.
Can ROI be negative?
Yes, whenever you get back less than you put in — and the maths here handles it without complaint. The CAGR will then show the steady yearly rate of the decline, which is often the more useful number: losing 5% a year for four years is a very different problem from losing 20% in one bad year.
Related calculators
This calculator gives estimates for learning. Rates, taxes and rules change, and your lender or the IRS has the final numbers — check big decisions against the real documents.