What is ROI (Return on Investment)?

ROI measures the percentage gain or loss on an investment relative to its cost. The formula is: ROI = ((Final Value - Initial Investment) / Initial Investment) x 100. For example, if you invested $10,000 and it grew to $15,000, your ROI is 50%.

What is annualized return?

Annualized return (CAGR) converts any investment return into an equivalent yearly rate, making it easy to compare investments held for different time periods. It accounts for compounding and is calculated as: (Final/Initial)^(1/years) - 1.

What is a good return on investment?

This depends on the investment type and risk level. The S&P 500 has historically returned about 10% annually. A 'good' return beats inflation (3-4%) at minimum. Low-risk bonds might return 3-5%, while higher-risk stocks aim for 8-12%+.

Investment Return Calculator

Calculate ROI, annualized returns, and total gain on any investment.

Initial Investment

Final Value

Time Period

years

Dividends Received (optional)

Total Return (ROI)

Annualized Return (CAGR)

Total Gain/Loss

Gain Multiple

1.00x

Avg Annual Gain

How to Use This Investment Return Calculator

Enter your initial investment — the amount you originally invested.

Enter the final value — the current or ending value of your investment.

Set the time period — how long you held the investment (in years).

Add dividends (optional) — include any cash distributions received during the holding period.

Understanding Investment Returns

Measuring investment performance correctly is essential for making informed financial decisions. Different metrics tell you different things about how well an investment has performed.

ROI (Return on Investment)

ROI is the simplest measure of investment performance. It tells you the total percentage gained or lost relative to your initial investment:

ROI = ((Final Value + Dividends - Initial) / Initial) × 100

ROI is useful for quick comparisons but doesn't account for the time period. A 50% return over 2 years is much better than 50% over 10 years.

CAGR (Compound Annual Growth Rate)

CAGR converts any return into an equivalent annual rate, making it the best metric for comparing investments held for different time periods:

CAGR = (Final / Initial)^1/years - 1

CAGR assumes steady growth and smooths out volatility. It's the industry standard for reporting long-term investment performance.

Historical Benchmarks

When evaluating your returns, compare against these benchmarks: S&P 500 averages ~10% annually. Bonds average ~4-6%. Inflation averages ~3%. A return that beats inflation preserves purchasing power; a return that beats the S&P 500 is outperforming the market.

Frequently Asked Questions

ROI measures the total percentage gain or loss relative to the initial investment. Formula: ((Final Value - Initial) / Initial) x 100. A $10,000 investment that grows to $15,000 has a 50% ROI.

Annualized return (CAGR) converts any return into an equivalent yearly rate, accounting for compounding. It's the best way to compare investments held for different time periods. Formula: (Final/Initial)^(1/years) - 1.

A "good" return depends on risk level. The S&P 500 averages ~10% per year. Low-risk savings might return 4-5%. A good return exceeds both inflation (~3%) and what you could earn in a low-risk alternative.

Dividends are part of your total return. If you invested $10,000, it's now worth $12,000, and you received $500 in dividends, your total return is ($12,000 + $500 - $10,000) / $10,000 = 25%, not just 20%.