ROI Calculator - Total and Annualized Return on Investment

What ROI measures

Return on Investment answers one question: how much did you gain or lose as a percentage of what you put in? The formula is ROI = (Amount returned - Amount invested) / Amount invested. A $10,000 investment that returns $15,000 produces an ROI of 50%. A $10,000 investment that returns $8,000 produces an ROI of -20%.

Worked example: total ROI

Say you bought shares for $5,000 and sold them for $7,500 two years later. Your gain is $2,500 and your total ROI is $2,500 / $5,000 = 50%. That tells you the size of the return, but not how fast it grew. Two investments can both produce 50% total ROI but be very different if one took 2 years and the other took 10.

Annualized ROI (CAGR)

Annualized ROI converts total ROI into an average yearly growth rate, making it possible to compare investments that lasted different lengths of time. The formula is: CAGR = (Returned / Invested)^(1 / years) - 1.

• $5,000 growing to $7,500 in 2 years: CAGR = (1.5)^(0.5) - 1 = approximately 22.5% per year.
• $5,000 growing to $7,500 in 10 years: CAGR = (1.5)^(0.1) - 1 = approximately 4.1% per year.
• Same 50% total ROI, but the annualized rate differs by more than 18 percentage points. Time completely changes the picture.

Dates mode vs. fixed-length mode

The calculator offers two ways to specify duration. Use "Dates" when you know the exact start and end dates of your investment, for example stock bought on a specific day and sold on another. Use "Length" when you only know the duration in years, such as a 2.5-year bond or a fixed-term deposit. Both modes produce the same annualized ROI calculation once the number of years is resolved from your inputs.

Using ROI to benchmark

ROI is most useful when compared to a reference point. The US S&P 500 has returned roughly 10% per year on average over long periods. High-yield savings accounts in 2024 offered around 4% to 5% annually. If your investment returned 12% annualized, it outperformed both. If it returned 3%, a savings account would have done better.

• Equity benchmark: compare your annualized ROI to a relevant index (S&P 500 approximately 10%/yr, global equities approximately 8%/yr long-term).
• Risk-free rate: compare to government bonds or savings rates to see if the extra risk was rewarded.
• Project evaluation: apply ROI to marketing spend, real estate, or any initiative with a measurable cost and outcome.

Where ROI falls short

• No time dimension in total ROI: a 50% return over 1 year is very different from 50% over 20 years. Always pair total ROI with either duration or annualized ROI.
• No risk adjustment: ROI does not reflect volatility or uncertainty. A 15% return on a highly volatile asset is not comparable to 15% on a stable one.
• No interim cash flows: if you received dividends, rental income, or made partial withdrawals during the period, this simple formula may over- or understate real performance.
• Ignores inflation: a nominal 7% annualized ROI over 10 years at 3% average inflation delivers only about 4% real purchasing power growth per year. The numbers look better than the economic reality.
• Definitions vary: whether you include acquisition costs, reinvested dividends, or tax payments will change the result. Be consistent when comparing two investments side by side.

Fees, taxes, and real ROI

This calculator does not model fees or taxes. To approximate net ROI, reduce "Amount returned" by any costs you paid such as brokerage commissions or closing costs. A 1% annual fund fee on a 5-year investment reduces total return by roughly 5 percentage points. Capital gains taxes vary widely: short-term rates in the US run from 20% to 37%, while long-term rates are typically 0%, 15%, or 20%. Subtracting your estimated tax from the gain before entering "Amount returned" gives a closer approximation to after-tax ROI.

Inputs explained

• Amount invested: the total capital you put in, including any acquisition costs you want to account for.
• Amount returned: the total value received back including any income such as dividends or rent, if you want gross ROI before taxes.
• Start and end dates (Dates mode): the exact dates when the investment began and ended. The calculator derives the year count from these automatically.
• Investment length (Length mode): the duration in years including decimals. Use 2.5 for a 30-month holding period, for example.

Supporting calculators

• Compound projection: use the Compound Interest Calculator to turn a static ROI result into a multi-year growth scenario with compounding and recurring contributions.
• Purchasing-power view: use the Inflation Calculator to convert a nominal ROI into real purchasing power by accounting for historical or estimated inflation.
• Income planning: use the Investment Income Calculator to estimate how much income a given capital balance can generate, or how much capital you need to reach a target income.

Learn more

• Full walkthrough: read the ROI Calculator Guide for realistic scenarios, annualized ROI interpretation, and common mistakes to avoid.