How to calculate return on investment
Return on investment (ROI) measures how much your investment earned relative to what you put in. The formula is simple: ROI = (Ending Value − Amount Invested) ÷ Amount Invested. Enter those two numbers above and the calculator returns your total ROI percentage and the net gain in dollars.
Total ROI answers “how much did I make?” but ignores how long it took. If one investment returned 80% in 3 years and another returned 80% in 10 years, the total ROI is the same but the first is far better. That is why the calculator also shows your annualized return (CAGR) — the equivalent yearly rate that gets you from start to finish.
When you added money along the way — regular contributions each month — the annualized return switches automatically to a money-weighted return (IRR), which accounts for the timing of each deposit. This is the method used by investment professionals and gives a more accurate picture of your personal performance than a simple CAGR.
What is a good ROI?
The honest answer is: it depends entirely on what you are comparing it to. Broad U.S. stock market indexes have delivered roughly 10% per year in nominal terms over very long periods — about 7% after inflation. That is a common benchmark for equity investments.
A savings account or CD might return 4–5% today — much lower, but with essentially zero risk of loss. Real estate returns vary wildly by market and property. Private equity and venture capital target higher returns, with proportionally higher risk and illiquidity.
Use the “Beat the S&P?” chip in the What-If panel to see immediately whether your investment outperformed or underperformed the broad market over the same period. That is the most useful benchmark check for equity investments.
The hidden cost of fees on your ROI
A 2% annual expense ratio — common in actively managed mutual funds — shaves 2 percentage points off your effective return every single year. At a gross return of 8%, you net 6%. Over 20 years on a $50,000 investment, that difference compounds to tens of thousands of dollars in lost returns.
Index funds typically charge 0.03–0.20% per year. Enter your actual gross return above and hit the “After 2% fees” chip to see exactly what that drag costs you over your specific holding period. Most investors are surprised how large the number is.
Want to project future growth instead?
This calculator works backwards from a known result. To project what a current investment could grow to over time, use:
- Compound Interest Calculator → Model future growth with any contribution schedule.
- Investment Return Calculator → All three modes — ROI, projection, and S&P 500 backtest.
Frequently asked questions
How do you calculate ROI?
ROI (return on investment) = (Final Value − Total Amount Invested) ÷ Total Amount Invested, expressed as a percentage. If you invested $10,000 and it grew to $15,000, your ROI is ($15,000 − $10,000) ÷ $10,000 = 50%. The calculator above does this instantly and also shows your annualized return so you can compare investments held for different time periods.
What is a good ROI on an investment?
It depends on the asset class and time horizon. U.S. broad stock market indexes have averaged roughly 10% per year in nominal terms over long periods — that is a common benchmark for equities. Cash, CDs, and bonds offer lower but safer returns. A "good" ROI is one that fairly compensates for the risk and illiquidity you took on, relative to alternatives available at the time.
What is the difference between ROI and annualized return?
ROI is the total gain over the whole holding period, regardless of how long it took. Annualized return (CAGR) expresses that same gain as an equivalent yearly rate — so you can compare a 2-year investment to a 10-year one on equal terms. A 100% ROI over 5 years is a 14.87% annualized return; over 10 years the same 100% total is only a 7.18% annualized return.
What does a 200% ROI mean?
A 200% ROI means your investment tripled in value. If you invested $5,000 and it is now worth $15,000, your gain is $10,000 — which is 200% of the original $5,000 invested. Note: a 100% ROI doubles your money; 200% triples it. The confusion arises because people sometimes conflate "gain" with "final value."
Should I use ROI or annualized return to compare investments?
Always use annualized return (CAGR) when comparing investments held for different lengths of time. Total ROI ignores time entirely, so it is not a fair comparison across different holding periods. Use ROI as a quick headline number for a single investment; switch to annualized return the moment you want to compare two opportunities side by side.