Free Investment ROI Calculator

Reading ROI and annualized return

"I doubled my money" means very different things over two years and over twenty. Total ROI measures the size of a gain; annualized return measures its speed. Comparing investments requires the second, because it's the only one that accounts for time.

Why annualized return is the comparable number

Total ROI answers "how much did this grow?" CAGR — compound annual growth rate — answers "at what yearly rate would it have had to grow to get there?" Only the second lets you compare a five-year holding against a twenty-year one, or against a savings account quoting an annual rate.

The example makes the point starkly: 65% sounds identical in both cases, but 10.5% a year and 2.5% a year are entirely different investments. Whenever a return is quoted without a time period attached, that's the missing information.

CAGR is a smoothed average, not a history

A 10.5% CAGR doesn't mean the investment gained 10.5% each year. It could have risen 40% one year, fallen 15% the next, and arrived at the same place. CAGR reports only the start point, the end point, and the elapsed time.

This matters because volatility is a real cost — it affects when you can sell, and it affects outcomes badly if you're withdrawing along the way. Two investments with identical CAGRs can be very different to actually hold.

Where additional contributions complicate things

This calculator adds any additional amount invested to your starting capital and compares the total to the final value. That's a reasonable simplification, but it ignores when each contribution was made — money added in the final year had far less time to grow than money added at the start.

For accounts you contribute to regularly, the resulting CAGR will understate the true performance of the early money and overstate the late money. Money-weighted return calculations exist for this reason; for a lump sum held over a period, the simple version here is exact.

Nominal returns versus what you keep

The figures here are before taxes, fees, and inflation, each of which reduces what you actually end up with:

• Taxes depend on the account and holding period. Long-term capital gains are generally taxed more favorably than short-term, and tax-advantaged accounts change the picture entirely.
• Fees compound against you. An expense ratio of 1% versus 0.05% is a meaningful drag across decades.
• Inflation erodes purchasing power. A 10.5% nominal return during 3% inflation is closer to 7.3% in real terms.

To reflect fees you already know about, enter a final value net of them. Taxes and inflation are outside what this calculates.

What counts as a good return

There's no universal benchmark, because return can't be judged without risk. A 10% return from a diversified index fund and a 10% return from a single speculative position are not equivalent achievements.

The standard approach is comparing against a relevant index over the identical period — if a fund returned 10.5% while its benchmark returned 12%, the gain was real but underperformed a simpler alternative. Past returns also say nothing reliable about future ones, which is why extrapolating a strong CAGR forward is the most common way this calculation gets misused.

What this calculator doesn't include

It computes profit, total ROI, and CAGR from a starting value, any additional invested amount, a final value, and a time period. It doesn't account for dividends unless they're reflected in your final value, the timing of contributions or withdrawals, taxes, fees, inflation, or risk. A total loss produces a −100% return, which is a valid result rather than an error.