ROI Calculator
Free ROI calculator. Compute return on investment and annualized CAGR for any investment, with optional recurring contributions. No signup.
What ROI measures
Return on investment is the total gain from an investment divided by the total amount invested, shown as a percentage. It is the simplest way to answer “did this make money?” — but it ignores how long the money was tied up. This calculator gives both the headline ROI and the annualized return (CAGR), the steady yearly rate that would produce the same ending value, so investments of different lengths can be compared fairly.
How the calculator works
- Total contributed = initial investment + (monthly contributions × years × 12).
- Profit = final value − total contributed.
- ROI = profit ÷ total contributed × 100.
- Annualized return (CAGR) is the rate that compounds the initial investment, plus any contributions, to the final value over the holding period. Without contributions it reduces to the classic formula; with contributions the tool solves for the rate numerically.
A worked example
A $10,000 investment worth $15,000 after five years, with no contributions:
| Measure | Calculation | Result |
|---|---|---|
| Total contributed | 10,000 | $10,000 |
| Profit | 15,000 − 10,000 | +$5,000 |
| ROI | 5,000 ÷ 10,000 | 50.0% |
| Annualized (CAGR) | (15,000 ÷ 10,000)1/5 − 1 | 8.45% |
A second case shows why contributions change the picture: investing nothing up front but adding $500 a month for five years to reach $40,000 means you contributed $30,000, made $10,000, and earned a 33.3% ROI — an annualized 11.23%, higher than the lump-sum example because most of the money was invested for less than the full five years.
ROI vs CAGR at a glance
| Holding period | 50% total ROI is… |
|---|---|
| 2 years | 22.5% annualized |
| 5 years | 8.45% annualized |
| 10 years | 4.14% annualized |
The same total return looks excellent over a short period and ordinary over a long one. Annualizing is what makes two investments comparable.
Common mistakes
- Comparing ROI across different time spans. A 50% return in two years beats a 50% return in ten; always annualize.
- Forgetting contributions in the denominator. Money added along the way is part of what you invested, and leaving it out inflates the return.
- Ignoring fees and tax. Platform fees, advice fees, and capital gains tax all reduce the real return.
- Confusing annualized return with a guarantee. CAGR is the average rate that fits the endpoints; the actual path may have swung wildly.
Nominal vs real returns
The figures here are nominal: they ignore inflation. To see what a return is worth in today’s purchasing power, subtract inflation from the annualized figure. An 8.45% annualized return with 3% inflation is roughly 5.29% in real terms, because the value has to grow by the inflation rate just to stand still. Over long periods that gap compounds into a large difference, so judge an investment on the real return whenever you are comparing it against spending the money now.
Frequently asked questions
What is a good ROI?
It depends on risk and time. Historic broad equity markets have returned roughly 7–10% a year before inflation over long periods, so a steady annualized return near that range is a reasonable reference point — not a promise. Higher figures usually carry higher risk.
What is the difference between ROI and CAGR?
ROI is the total return over the whole period and says nothing about speed. CAGR converts it to an equivalent annual rate so different holding periods can be lined up side by side.
Can ROI be negative?
Yes. If the final value is below the total contributed, the profit is negative and the ROI is negative — the tool shows the sign on the profit figure so a loss is obvious.
How does this differ from a compound interest projection?
This tool works backwards from a known ending value to find the return you achieved. To project a starting balance forward at an assumed rate, the investment calculator is the right direction, and the retirement calculator applies the same maths to a savings goal.