Return on Investment (ROI) Calculator

Calculate ROI, annualized ROI, CAGR, investment profit, inflation-adjusted returns, and compare investment performance over time.

Currency:

ROI Inputs

Money in, money out, and how long it took

Amount Invested

Amount Returned

Investment Time

From

About the ROI Calculator

Return on Investment (ROI) is the single most useful number for comparing where to put a dollar — it tells you what fraction of the original outlay came back as profit. But raw ROI can lie. A 50% return over six months crushes a 50% return over ten years, and a 30% return that quietly trailed inflation actually lost purchasing power. This calculator goes beyond the simple ROI formula to give you annualized return (CAGR), inflation-adjusted real returns, side-by-side comparison across multiple investments, and a benchmark engine that scores your result against the S&P 500, NASDAQ, treasuries, and savings accounts.

How ROI Calculation Works

Pick a tab for what you want to measure

Use 'ROI Calculator' for a simple before/after comparison with auto-annualization. Use 'Annualized ROI' when you already know the time horizon and want the CAGR. Use 'Investment Comparison' to rank multiple holdings. Use 'Inflation-Adjusted ROI' to see your real return after CPI.

Inputs are deliberately minimal

Amount invested, amount returned, and a time period. Time can be entered as two dates (start and end) or as years/months/days — both produce the same fractional-year value for CAGR and annualized math. Everything else (gain, percentage, multiple, rating) is derived automatically.

Three Ways to Use This Calculator

Evaluate a single trade or position

Plug in what you paid, what you sold for (or current market value), and your hold period. Read the ROI, profit multiple, and annualized return — annualized is what you should compare against benchmarks.

Compare 2–3 investments head-to-head

Use the Comparison tab to score real estate vs index funds vs a private investment over their actual hold periods. The CAGR-weighted score adjusts for differences in time horizon so the winner is the best per-year return, not just the biggest dollar gain.

Stress-test against inflation

Use the Inflation-Adjusted tab to see whether your nominal gain actually grew purchasing power. A 6% nominal return at 5% inflation is a 1% real return — not the win it looks like on a brokerage statement.

Best Practices for Measuring Returns

Always annualize before comparing two investments held for different time periods.
Use real (inflation-adjusted) CAGR for any holding period longer than 3 years.
Include all costs — fees, commissions, taxes — in your 'Amount Invested'.
Don't compare a 6-month flip to a 10-year hold using raw ROI; convert both to CAGR.
Treat ROI as one number among many — pair it with risk, liquidity, and drawdown analysis.
Beware survivorship bias: the investments you remember picking are not a random sample.

Why ROI Matters

Most investors fail not because they pick bad assets but because they measure performance wrong. Quoting a five-bagger without mentioning it took 12 years hides the real annualized return (about 14%). Bragging about a 30% gain during a year inflation ran at 9% glosses over a real return closer to 20%. ROI is a starting point, not a verdict — annualize it, deflate it for inflation, and benchmark it against the passive alternative before you decide a strategy is working.

Tricky Cases Investors Get Wrong

Total return vs price return

If your investment paid dividends, distributions, or interest, those go in 'Amount Returned' alongside the final sale value. Comparing price-only return against another investment's total return systematically understates the dividend-payer.

Short holds and tax treatment

U.S. gains held under a year are taxed as ordinary income (up to ~37% federal); held over a year, long-term capital gains rates apply (0/15/20%). A 20% pre-tax short-term gain may net less than a 15% pre-tax long-term gain.

Cherry-picked start dates

Calculating ROI from the absolute bottom of a 2009 drawdown to the absolute top of a 2021 rally produces a flattering CAGR that nobody actually captured. Use entry/exit dates you actually traded, not the optimal hindsight points.

Core Formulas

Investment Gain

Amount Returned − Amount Invested

ROI

(Investment Gain ÷ Amount Invested) × 100

Profit Multiple

Amount Returned ÷ Amount Invested

Annualized ROI (CAGR)

((FV ÷ PV)^(1 ÷ Years)) − 1

Real CAGR (Fisher)

((1 + Nominal) ÷ (1 + Inflation)) − 1

Rule of 72 (Doubling)

72 ÷ Annualized Return %

Purchasing Power

Final Value ÷ (1 + Inflation)^Years

Common ROI Mistakes

Comparing raw ROI across investments with different hold periods.
Forgetting to include fees, commissions, or taxes in the cost basis.
Ignoring inflation on multi-year holds — nominal beats real on paper, not in life.
Using gross (pre-tax) returns when the real comparison is net of taxes.
Treating dividends as separate income rather than including them in total return.
Anchoring on a single great trade — outliers don't tell you the strategy's expected return.

Methodology & Sources

ROI, CAGR, and Fisher-equation real-return formulas in this calculator follow standard CFA Institute and corporate-finance textbook conventions. Inflation defaults to the long-run U.S. CPI average (~3%); adjust to match your relevant currency or country. Benchmark figures (S&P 500, NASDAQ, bonds, real estate) are rough long-run annualized averages — actual historical returns vary materially by start year, dividend reinvestment assumptions, and tax treatment. Past performance is not predictive of future returns.

Frequently Asked Questions

What is ROI?

Return on Investment is the ratio of net profit to original cost: (Final Value − Cost) ÷ Cost × 100. It's a quick way to express how much you gained relative to what you spent, expressed as a percentage. A $1,000 investment that grew to $1,500 has a 50% ROI.

How do you calculate ROI?

ROI = (Amount Returned − Amount Invested) ÷ Amount Invested × 100. The 'amount returned' should include all proceeds — final sale value plus any dividends, interest, or distributions received. The 'amount invested' should include all costs to acquire and hold the position, including commissions and fees.

What is a good ROI?

Context matters. A 7%–10% annualized return is the long-run average for U.S. large-cap stocks. A real-estate flip might target 15%–25% on the capital deployed. A short-term arbitrage trade might be a 'good' ROI at 2% if it took a week. Always annualize and compare against what passive index investing would have produced over the same period.

What is annualized ROI?

Annualized ROI converts any holding-period return into the equivalent yearly rate, using the CAGR formula: ((Final ÷ Initial)^(1/Years)) − 1. It lets you compare a 6-month investment against a 5-year one on apples-to-apples terms. Doubling your money in 6 months is a ~300% annualized return; doubling in 10 years is ~7.2%.

What is CAGR?

Compound Annual Growth Rate is the constant per-year return that would have grown the initial value into the final value over the specified period, assuming reinvestment. It smooths out the year-to-year volatility into a single yearly rate. CAGR is the standard way investment managers report multi-year performance.

What is the difference between ROI and CAGR?

ROI is total return over the whole period — it doesn't know or care how long that period was. CAGR is a per-year rate that already accounts for compounding and time. A 100% ROI over 10 years is ~7.2% CAGR; the same 100% ROI over 2 years is ~41% CAGR. Use ROI to describe what happened; use CAGR to compare investments.

How does inflation affect ROI?

Inflation reduces the purchasing power of every dollar over time. A 5% nominal return when inflation is 3% is only a ~1.94% real return (Fisher equation: (1.05 ÷ 1.03) − 1). For holds longer than a few years, real returns matter more than nominal — they tell you whether your money actually bought more at the end than at the beginning.

Should taxes be included in ROI calculations?

For honest comparison against alternatives, yes — net-of-tax return is what actually ends up in your account. A 20% pre-tax short-term gain (taxed at ordinary income) may net less than a 15% pre-tax long-term gain (taxed at capital-gains rates). Tax-advantaged accounts (401k, IRA, Roth) change the calculation significantly.

Can ROI be negative?

Yes. A negative ROI means the investment returned less than you put in — you lost money. The calculator handles negative returns the same way: ROI percentage, annualized return, and inflation-adjusted real return can all turn negative. A negative real return with a positive nominal return means inflation outpaced your gain.

Is ROI enough to evaluate an investment?

No. ROI tells you what happened, not the risk you took to get there. Two investments can produce identical 10% ROI while having vastly different volatility, drawdown depth, liquidity, and tax treatment. Pair ROI with annualized standard deviation, max drawdown, Sharpe ratio, and after-tax return for a complete picture.