ROI Calculator

ROI (Return on Investment) = (Final Value − Initial Investment) ÷ Initial Investment × 100. Example: Invest $1,000, end up with $1,500. ROI = (1500 − 1000) ÷ 1000 × 100 = 50%. Interpretation: 50% ROI means you gained 50% of your initial investment. ROI doesn't account for time. A 50% ROI over 1 year is very different from 50% over 10 years. For time-adjusted comparison, use annualized ROI (CAGR). Note: ROI is a single-number metric — it doesn't capture volatility, risk, timing of cash flows, or comparison to alternatives.

CAGR = (Final Value / Initial Value)^(1/years) − 1. It's the constant annual rate that would produce the final value from the initial value. Example: $10,000 grows to $16,105 over 5 years. CAGR = (16105/10000)^(1/5) − 1 = 1.61105^0.2 − 1 = 1.10 − 1 = 10%/year. Uses: compare investments of different durations. S&P 500 historical CAGR: ~10% nominal, ~7% real (inflation-adjusted). Real estate CAGR: ~3–5% nationally (US). Bitcoin 2013–2023: ~50%+ CAGR. Bonds: ~3–5%. Venture capital funds: target 20–30%+. CAGR smooths out year-to-year volatility — doesn't show risk.

Context-dependent. Stock market benchmarks: S&P 500 average annual return: ~10% (nominal), ~7% real. A 10-year investment with 7% CAGR = 97% total ROI (nearly doubles). Business context: small businesses target 15–25% ROI. Startups: VCs target 10x+ (1000%+ ROI) in 7–10 years to compensate for failures. Real estate: residential REI typically 8–12% total annual return (including rent). Rule of 72: years to double = 72 ÷ annual return. At 7%: doubles every ~10.3 years. At 10%: every ~7.2 years. At 15%: every ~4.8 years.

Simple ROI doesn't account for additional investments after the initial amount. For multiple cash flows, use Internal Rate of Return (IRR). IRR is the discount rate that makes the Net Present Value (NPV) of all cash flows equal to zero. For regular contributions (like 401k): use the future value of annuity formula. Example: $500/month at 7% for 30 years: FV = 500 × ((1 + 0.07/12)^360 − 1) / (0.07/12) = $567,764. Total invested: $180,000. Profit: $387,764. Overall ROI: 215%. This calculator focuses on simple ROI for single initial investments. Use the retirement or savings calculators for contribution scenarios.

ROI: (profit / cost) × 100. Simple, no time value. Good for quick comparisons of equal-duration investments. Annualized ROI (CAGR): adjusts ROI for time — comparable across different holding periods. IRR (Internal Rate of Return): the discount rate that makes NPV = 0. Handles complex cash flows with multiple in/outflows at different times. Used in corporate finance, private equity, real estate. NPV (Net Present Value): sum of present values of future cash flows minus initial investment. Positive NPV = value-creating investment. Used with a "required rate of return" or "hurdle rate." For simple investments: ROI/CAGR is sufficient. For complex projects with multiple cash flows: IRR or NPV is more appropriate.