How to use this calculator
ROI mode:
- Enter the amount invested and the amount returned or final value. For something you still own, use what it’s worth today; include any income you received along the way.
- Enter how long you held it, either in years or by dates. Dates give an exact day count, so a purchase on January 14, 2022, valued on November 6, 2026, counts as 1,757 days (4.81 years).
- To compare, switch Compare with a second investment to Yes and enter investment B.
CAGR mode: enter a starting value, an ending value and the number of years to get the compound annual growth rate, with the smooth year-by-year path that rate implies.
The formulas
ROI compares the gain with what you put in:
Annualized ROI (or CAGR) spreads that return over the years it took, with compounding:
ROI vs. annualized ROI, step by step
You invest $10,000 and four years later it’s worth $16,000.
- Gain: $16,000 − $10,000 = $6,000.
- ROI: $6,000 ÷ $10,000 = 60%. This is your total return. It says nothing about time.
- Growth multiple: $16,000 ÷ $10,000 = 1.6.
- Annualized ROI: 1.6^(1/4) − 1 = 1.1247 − 1 = 12.47% a year.
- Check: $10,000 × 1.1247 × 1.1247 × 1.1247 × 1.1247 ≈ $16,000.
ROI answers “how much did I make?” Annualized ROI answers “how fast did I make it?” You need the second to compare investments held for different lengths of time, or to compare a return with an interest rate.
The time it takes matters a lot. Here’s the same 60% total return earned over different periods:
| Held for | Total ROI | Annualized ROI |
|---|---|---|
| 1 year | 60% | 60% |
| 2 years | 60% | 26.49% |
| 3 years | 60% | 16.96% |
| 5 years | 60% | 9.86% |
| 10 years | 60% | 4.81% |
| 20 years | 60% | 2.38% |
Comparing two investments
Investment A turns $10,000 into $16,000 over 4 years: a 60% ROI, 12.47% a year. Investment B turns $10,000 into $13,000 over 2 years: only 30% ROI, but 14.02% a year.
A made more money in total, but B grew faster. If you could keep earning each rate, $1,000 would grow to $3,713 in 10 years at B’s rate versus $3,238 at A’s. That’s why the calculator puts both on a “growth of $1,000” chart, with the same starting amount and the same time frame.
The real decision also depends on risk, what you’d do with the money after B ends, taxes and fees. Annualized ROI makes the comparison fair on time; it doesn’t make it fair on risk.
CAGR
CAGR uses the same formula for anything that grows: revenue, a portfolio, a home’s value, a customer count. Growing from $10,000 to $20,000 in 7 years is a CAGR of 10.41%. The rule of 72 gets close: 72 ÷ 7 ≈ 10.3%.
CAGR is a smoothed rate. Real investments rise and fall from year to year, and their simple average return (the arithmetic mean) is usually higher than the compound rate you actually earned. CAGR is the one that matches your actual start and end values.
Tips
- Include every cost and every dollar of income. Fees, commissions, repairs and taxes reduce your real ROI; dividends, interest and rent raise it.
- Adjust for inflation over long periods. A 3% annualized return during 3% inflation is roughly a 0% real return. The inflation calculator converts dollars between years.
- Remember taxes on the gain. The capital gains tax calculator estimates what you’d owe when you sell.
- For business projects, combine this with the break-even calculator: break-even tells you when a project stops losing money, ROI tells you whether it was worth it.
- For future growth with regular contributions, use the investment calculator or the compound interest calculator. For a quick percent change between two values, the percentage change calculator is simpler.
Assumptions and limitations
ROI here is a holding-period return on a single amount invested at the start. If you added or withdrew money along the way, the timing of those cash flows changes the true annualized return, which needs an internal rate of return (or money-weighted return) calculation instead. Date mode counts calendar days and divides by 365.25. Taxes, fees and inflation are only included if you build them into the amounts you enter.
Sources
- OpenStax, Principles of Finance, 15.1 Risk and Return to an Individual Asset (holding period return, effective annual rate, arithmetic vs. geometric average return)
- OpenStax, Principles of Finance, 13.1 Measures of Center (geometric mean of returns)
This calculator measures past or hypothetical returns. It isn’t investment advice, and past returns don’t predict future results.
Frequently asked questions
How do you calculate ROI?
Subtract what you invested from what you got back, then divide by what you invested. If $10,000 becomes $16,000, the gain is $6,000 and the ROI is $6,000 ÷ $10,000 = 60%. Include any income you received, such as dividends or rent, in what you got back.
What is annualized ROI?
It's the steady yearly rate that, compounded, turns your starting amount into your ending amount over the time you held the investment. A 60% return over 4 years works out to 12.47% a year, because (1.6)^(1/4) − 1 = 0.1247. It's the same calculation as the compound annual growth rate, or CAGR.
Why not just divide ROI by the number of years?
Because that ignores compounding. Dividing 60% by 4 years gives 15% a year, but 15% compounded for 4 years would turn $10,000 into about $17,490, not $16,000. The annualized figure of 12.47% is the rate that actually gets you to $16,000.
What is a good ROI?
It depends on the risk and the alternatives. Compare your annualized ROI with what you could earn elsewhere for similar risk, such as a savings account or CD for safe money, or a broad stock index fund for long-term investing. A business project should beat the cost of the money you put into it, including any loan's APR.
Can ROI be negative?
Yes. If you get back less than you put in, ROI is negative. Turning $10,000 into $8,000 over 3 years is a −20% ROI, or about −7.17% a year. The lowest possible ROI is −100%, when you lose everything.
Should I annualize a return earned in a few months?
Be careful. A 5% gain in 3 months annualizes to 21.55%, which assumes you could repeat that result all year. Short-term annualized figures exaggerate both gains and losses, so treat them as a rough comparison only.
Updated November 2026. Results are estimates for educational purposes and depend on the inputs you provide.