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ROI Calculator

Calculate total ROI, annualized CAGR and the required return to hit a future target value.

ROI
50.00%
Gain $5,000.00
Total ROI
50.00%
Gain of $5,000.00
Annualized return (CAGR)
14.47%
Profit
$5,000.00

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How to use the ROI Calculator

  1. 1

    Enter your inputs

    Fill in the required fields at the top of the roi calculator. Each input shows a default placeholder so you can see the expected format and units before you type.

  2. 2

    Adjust assumptions and options

    Use the toggles, sliders and dropdowns to tailor the calculation to your situation — currency, country, time period, advanced options and any optional fields all change the result in real time.

  3. 3

    Review the result

    The result card updates instantly as you type. Read the headline number, then check the breakdown, chart and any per-period schedule to understand how the inputs combined to produce the answer.

  4. 4

    Compare scenarios

    Change one input at a time to see how sensitive the result is to that variable. This is how you build intuition: small changes that move the answer a lot are the levers that matter.

  5. 5

    Share or save your result

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What this calculator does

ROI is the ratio of net profit to amount invested, expressed as a percentage. Total ROI = (final value - initial cost) / initial cost. That number alone is misleading for comparison because a 50% ROI earned over 1 year is wildly better than 50% over 10 years. To compare, you convert to CAGR (Compound Annual Growth Rate), which is the constant annual rate that would produce the same end value from the same start over the same period. CAGR is what investors typically mean by "annualized return." It assumes returns compound smoothly each year, which is rarely how reality unfolds, but it's the right metric for comparing different investments. For most asset classes, useful CAGR benchmarks are: cash 1-3%, bonds 3-5%, balanced portfolios 5-7%, broad equity 7-10%, individual stocks vary wildly.

Formula

TotalROI = (FV - PV) / PV, CAGR = (FV / PV)^(1/n) - 1, RequiredReturn = (Target / PV)^(1/n) - 1
PV
Initial investment / present value
FV
Final value at end of holding period
n
Holding period in years (can be fractional)
TotalROI
Cumulative return as a decimal (0.50 = 50%)
CAGR
Compound Annual Growth Rate as a decimal
Target
Desired future value for the required-return calculation

Total ROI is simple division - it answers "by what percentage did my money grow?" without regard to time. CAGR converts that into "what constant annual rate would have produced this result?" by taking the n-th root. CAGR assumes geometric (compound) growth, not arithmetic average - if you gain 100% one year and lose 50% the next, your CAGR is 0%, not the arithmetic average of 25%. Required return inverts the CAGR formula: given where you are, where you want to be and how long you have, what compound rate do you need?

Worked examples

Example: $10,000 grew to $18,000 over 5 years

PV = $10,000, FV = $18,000, n = 5 years.

Total ROI = (18,000 - 10,000) / 10,000 = 80% CAGR = (18,000 / 10,000)^(1/5) - 1 = 1.8^0.2 - 1 = 0.1247 = 12.47% per year

So a "80% total return" sounds impressive but in annualized terms it's 12.47% per year - solid but in the normal range for an equity-heavy portfolio. Compare that to "30% in 1 year" (= 30% CAGR) or "200% in 20 years" (= 5.65% CAGR) and the picture changes dramatically. Always compare on CAGR.

Example: required return to triple money in 10 years

You have $50,000 and want $150,000 in 10 years for a down payment.

Required CAGR = (150,000 / 50,000)^(1/10) - 1 = 3^0.1 - 1 = 0.1161 = 11.61% per year

That's achievable but aggressive - it requires near-full equity exposure (historical S&P 500 CAGR is ~10% nominal, ~7% real). You'd either need to add monthly contributions, accept higher risk, extend the timeline, or reduce the target.

Example: negative ROI (loss)

You invested $20,000 and after 3 years it's worth $14,000.

Total ROI = (14,000 - 20,000) / 20,000 = -30% CAGR = (14,000 / 20,000)^(1/3) - 1 = 0.7^0.333 - 1 = -0.1118 = -11.18% per year

You lost 30% total, or 11.18% per year compounded. To get back to break-even you don't need to make 30% - you need (20,000 / 14,000) - 1 = 42.86% to recover. This is "asymmetric loss math" - losses require larger percentage gains to recover from than the loss itself.

Common use cases

  • Comparing two investments with different holding periods on a fair (annualized) basis
  • Setting a target CAGR for your portfolio to meet a goal (retirement, home, education)
  • Evaluating real estate investments by calculating CAGR on purchase-to-sale price
  • Tracking the performance of an individual stock or mutual fund vs its benchmark
  • Calculating the required return on a side business or new investment given a target IRR
  • Comparing pre-tax vs after-tax returns - apply tax to FV before computing ROI for a true comparison
  • Evaluating business projects by combining initial investment, ongoing cash flows and exit value
  • Computing the "rule of 72" doubling time - 72 / CAGR ~= years to double

What affects the result

  • Time horizon - the most under-appreciated factor; a 5% CAGR over 30 years matches a 15% CAGR over 10 years in absolute terms
  • Compounding frequency - daily, monthly and annual compounding give slightly different effective rates
  • Dividends or distributions - "total return" includes reinvested dividends; "price return" does not (huge gap for high-yield stocks)
  • Currency - international investments have a forex component; report ROI in your home currency
  • Inflation - nominal ROI flatters; real ROI (inflation-adjusted) is what matters for purchasing power
  • Taxes - capital gains tax, dividend tax and state/provincial taxes can take 20-40% of the gain
  • Transaction costs - brokerage, bid-ask spread, foreign exchange fees, fund expense ratios all drag on ROI
  • Cash flows - if you added money during the holding period, simple ROI is misleading; use IRR or money-weighted return instead

Tips

  • Always express returns as CAGR when comparing investments of different durations
  • Use real (inflation-adjusted) CAGR for long-horizon goals - nominal CAGR overstates wealth growth
  • Include all costs in PV (purchase price + commission + setup costs) and all proceeds in FV (sale price - selling costs - taxes)
  • Use the Rule of 72 for quick mental math - years to double ~= 72 / CAGR. 8% CAGR doubles in 9 years
  • Compare your portfolio CAGR to a relevant benchmark (S&P 500 for US large-cap, MSCI World for global, Nifty 50 for India)
  • Track CAGR over rolling 5- and 10-year windows to smooth out short-term volatility
  • For projects with multiple cash flows, switch from ROI to IRR (Internal Rate of Return) - same concept, handles uneven cash flows
  • Don't obsess over month-to-month returns - measure annually at minimum to avoid noise-driven decisions

Mistakes to avoid

  • Comparing investments by total return without normalizing for time - 50% over 2 years is much better than 50% over 10
  • Confusing CAGR with arithmetic average return - they diverge whenever returns are volatile
  • Using simple ROI when there are intermediate cash flows - should use IRR or money-weighted return
  • Ignoring fees and taxes - a "10% CAGR" gross can be 7% net after 1% TER and 20% LTCG
  • Using price-only return instead of total return for dividend-paying stocks - understates true performance by 2-3% per year
  • Forgetting inflation - a 5% CAGR at 4% inflation is barely beating purchasing power loss
  • Cherry-picking dates to start/end the calculation - measuring from the peak vs the trough gives wildly different ROI
  • Annualizing returns over very short periods - "30% in 1 month = 360% annualized" is meaningless and misleading

Frequently asked questions

What is a good ROI?

Depends on the asset class and holding period. Broad equity indexes have averaged ~10% nominal CAGR (~7% real) over the long run. A "good" ROI is one that beats your benchmark after costs and taxes. For US stock investors, anything sustainably above S&P 500 returns over 5+ years is "good"; for bond investors, beating the AGG.

How is ROI different from CAGR?

ROI is the simple total percentage gain regardless of time. CAGR is the constant annual rate that would produce that total gain. Use ROI to report a result, CAGR to compare investments of different durations. A 50% total ROI over 1 year is a 50% CAGR; over 5 years it's 8.45% CAGR; over 10 years it's 4.14% CAGR.

Does ROI include dividends?

It should. "Total return" includes dividends, distributions and reinvested coupons; "price return" does not. For a 4%-yielding stock held 10 years with capital appreciation, total return is roughly 4% per year higher than price return - a massive difference. Always check which version a quoted return is.

What if I added money during the holding period?

Simple ROI / CAGR are misleading because they assume one start and one end value. Use IRR (Internal Rate of Return) which handles multiple cash flows. For a SIP-style series of contributions, the IRR is what most brokers report as your "money-weighted return". Excel has IRR() and XIRR() functions; XIRR handles irregular intervals.

How does the Rule of 72 work?

Doubling time ~= 72 / CAGR. So 8% CAGR doubles money in 9 years, 12% in 6 years, 6% in 12 years. It's a mental-math shortcut for the exact log(2) / log(1 + r) calculation. Reasonably accurate for rates between 4% and 15%.

How do I calculate required return?

RequiredCAGR = (Target / Starting Value)^(1 / years) - 1. If you have $20K, want $100K in 15 years: required = (100/20)^(1/15) - 1 = 5^0.0667 - 1 = 11.34% per year. Adjust by adding monthly contributions or extending the timeline if the required return is unrealistic.

Should ROI be before or after tax?

Both are useful. Pre-tax ROI is the headline number used by managers and benchmarks. After-tax ROI is what actually shows up in your bank account. For high-tax jurisdictions and short holding periods, the gap can be 25-40%. Always compare after-tax for personal investment decisions, especially when comparing taxable vs tax-advantaged accounts.

What about real (inflation-adjusted) ROI?

Real ROI = (1 + nominal CAGR) / (1 + inflation) - 1. A 10% nominal CAGR at 3% inflation is a 6.8% real CAGR. For long-horizon goals (retirement, education), always plan in real terms - it removes guesswork about future inflation rates.

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