Finance Tools/ROI Calculator
ROI Calculator
Calculate ROI and CAGR
Investment Information
Required for CAGR calculation
Result
Enter values
ROI Calculator Guide
Learn how to measure investment returns
What is ROI?
Return on Investment (ROI) measures the profitability of an investment as a percentage. It compares the gain or loss relative to the initial cost, helping you evaluate the efficiency of different investments and make informed financial decisions.
How to Use This Calculator
- Enter your initial investment amount
- Enter the final value of your investment
- Optionally specify the time period for CAGR calculation
- View ROI percentage and annualized returns
Analysis Tips
- Compare ROI across similar investments for better decisions
- CAGR provides a more accurate picture for multi-year investments
- Consider inflation when evaluating real returns
Calculations
ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. CAGR = ((Final/Initial)^(1/years) - 1) × 100. All calculations are instant and private.
Frequently Asked Questions
What is the difference between ROI and CAGR?
ROI (Return on Investment) shows the total percentage gain or loss without considering time—a 50% return could be over 1 year or 10 years. CAGR (Compound Annual Growth Rate) normalizes returns to an annual basis, making it easier to compare investments of different durations. CAGR is more useful for long-term investment comparison.
What is considered a 'good' ROI?
A 'good' ROI depends on the investment type and risk level. Stock market investments historically return 7-10% annually. Real estate typically yields 8-12%. A good ROI beats the risk-free rate (Treasury bonds, ~4-5%) and compensates for the risk taken. Higher-risk investments should demand higher returns.
How do I calculate ROI when there are multiple investments?
For multiple investments, calculate the weighted average ROI based on the amount invested in each. Alternatively, use the time-weighted return method which removes the impact of cash flows. For portfolios with regular contributions, consider using internal rate of return (IRR) for more accurate measurement.
Should I factor in inflation when calculating ROI?
Yes, for meaningful analysis. Nominal ROI doesn't account for purchasing power loss. Real ROI = ((1 + Nominal ROI) / (1 + Inflation Rate)) - 1. If your investment returns 8% but inflation is 3%, your real return is only about 4.85%. Always consider real returns for long-term planning.
Why might two investments with the same ROI be different?
Timing, risk, and liquidity matter greatly. A 100% ROI over 5 years (14.9% CAGR) is very different from 100% over 20 years (3.5% CAGR). Also consider: risk level (volatile vs. stable), liquidity (can you access the money?), fees and taxes, and opportunity cost of capital tied up.