ROI Calculator | Return on Investment
Calculate return on investment percentage from cost and revenue.
What Is the ROI Calculator | Return on Investment?
ROI (Return on Investment) is the universal metric for measuring investment profitability as a percentage of the initial cost. Enter your initial investment, final value, and optionally the holding period to also get CAGR, the equivalent annualized rate. Preset examples include typical S&P 500, real estate, startup, and bond scenarios.
- ›ROI ignores time, a 100% gain over 10 years is very different from 100% in 1 year
- ›CAGR (Compound Annual Growth Rate) normalizes by time for fair comparison
- ›Investment multiple = final ÷ initial, a 2× means your money doubled
- ›Negative ROI is a loss, any final value below initial investment is negative ROI
Formula
ROI & CAGR Formulas
ROI (%)
(Final − Initial) / Initial × 100
Net Profit
Final Value − Initial Investment
CAGR
(Final / Initial)^(1/n) − 1
Investment Multiple
Final Value / Initial Investment
Rule of 72
Years to double ≈ 72 / annual rate
Breakeven
ROI = 0% when Final = Initial
How to Use
- 1Enter your initial investment amount in dollars
- 2Enter the final value (what the investment is worth now)
- 3Optionally enter the holding period in years for CAGR calculation
- 4Click Calculate ROI, see ROI%, net profit/loss, CAGR, and investment multiple
- 5Use the preset buttons to load common investment scenarios
- 6The Rule of 72 shows how long until your money doubles at the computed CAGR
Example Calculation
$10,000 invested, grew to $18,000 over 5 years:
ROI = $8,000 / $10,000 × 100 = 80%
Investment Multiple = $18,000 / $10,000 = 1.8×
CAGR = (1.8)^(1/5) − 1 = 1.1247 − 1 = 12.47%/yr
Rule of 72: doubles every 72/12.47 = 5.8 years
ROI vs. CAGR: which matters more?
80% ROI over 5 years sounds impressive, but the CAGR of 12.47%/yr is the meaningful comparison metric. A different investment with 80% ROI over 2 years would have CAGR ≈ 34%/yr, far superior despite the same raw ROI number.
Understanding ROI | Return on Investment
Historical Return Benchmarks
| Asset Class | Nominal CAGR | Real CAGR | Risk Level |
|---|---|---|---|
| US Stocks (S&P 500) | ~10%/yr | ~7%/yr | High |
| International Stocks | ~8%/yr | ~5%/yr | High |
| Corporate Bonds | ~5%/yr | ~2%/yr | Medium |
| Real Estate (REIT) | ~9%/yr | ~6%/yr | Medium |
| US Treasury Bonds | ~4%/yr | ~1%/yr | Low |
| Cash / Savings | ~2–4%/yr | ~0%/yr | Very Low |
Frequently Asked Questions
What is the difference between ROI and CAGR?
ROI tells you total gain; CAGR tells you the annual rate of growth. For comparing investments held for different periods, CAGR is the correct metric.
- ›100% ROI over 10 years = CAGR of ~7.2%/yr, matching the S&P 500 historical average
- ›100% ROI over 2 years = CAGR of ~41.4%/yr, exceptional performance
- ›CAGR = (Final/Initial)^(1/years) − 1, always annualized
- ›Use ROI for single-period profitability; use CAGR for multi-year comparison
What counts as a good ROI?
There is no universal good ROI, context determines quality. Higher returns always come with higher risk or longer holding requirements.
- ›US stocks (S&P 500): ~10% nominal (~7% real) annually, 1928–2023
- ›Real estate: 4–8% annually depending on market and leverage
- ›Bonds (10-yr Treasury): ~3–5% annually in normal rate environments
- ›Savings accounts/CDs: 0.5–5% depending on Fed rate environment
Can ROI be negative?
Negative ROI is a loss. The calculator handles negative values and shows the net loss in the profit/loss metric with the correct sign.
- ›ROI = −100% means total loss (final value = $0)
- ›CAGR with negative total return is mathematically defined but tricky to interpret
- ›Even losses are compared, a −10% loss beats a −30% loss for the same period
- ›Tax-loss harvesting uses negative ROI positions to offset gains
Does this account for taxes and fees?
After-tax ROI better reflects your actual wealth gain. In taxable accounts, capital gains taxes (0%, 15%, or 20% depending on holding period and income) significantly reduce net returns.
- ›Long-term capital gains (held >1 year): 0%, 15%, or 20% federal rate
- ›Short-term gains (held ≤1 year): taxed as ordinary income (up to 37%)
- ›Expense ratio fees compound over time: 1% difference over 30 years reduces ending value by ~25%
- ›To get after-fee CAGR: net_final = final × (1 − annual_fee)^years before calculating
What is the Rule of 72?
The Rule of 72 is a mental math shortcut derived from the formula for compound growth. It is accurate within a few percent for rates between 1% and 20%.
- ›6%/yr → doubles in ~12 years (72/6)
- ›8%/yr → doubles in ~9 years (72/8)
- ›10%/yr → doubles in ~7.2 years (72/10)
- ›12%/yr → doubles in ~6 years (72/12)
What is an investment multiple?
MOIC is commonly used in private equity and venture capital where exact timing is variable. It complements CAGR by providing a simple size-of-return measure.
- ›1.0× = break-even (no gain, no loss)
- ›2.0× = 100% ROI (money doubled)
- ›5.0× = 400% ROI (5 times your money)
- ›10.0× = 900% ROI, typical target for venture capital investments
What is the difference between simple ROI and annualized ROI?
Both metrics are useful, simple ROI for project profitability, CAGR for portfolio performance comparison over time.
- ›Simple: total profit ÷ cost, fast but ignores time
- ›Annualized: useful for benchmarking against index funds with known annual return
- ›CAGR handles compounding, it is not simply ROI ÷ years
- ›A 50% ROI over 3 years ≠ 16.7%/yr because of compounding: CAGR = (1.5)^(1/3)−1 ≈ 14.5%/yr