ROI Calculator
Calculate your Return on Investment (ROI) to measure the profitability of your investments. Compare simple ROI, annualized returns (CAGR), and adjust for inflation to see real returns.
Investment Details
Enter Investment Details
Fill in your investment information and click "Calculate ROI" to see your returns.
ROI Formulas
Simple ROI
Example: ($15,000 - $10,000) / $10,000 × 100 = 50%
Annualized ROI (CAGR)
Example: ($15,000 / $10,000)^(1/5) - 1 = 8.45%/year
Understanding ROI
Return on Investment (ROI) is a fundamental metric for measuring the profitability of an investment. It shows the percentage gain or loss relative to the initial investment, helping you evaluate and compare different investment opportunities.
Simple ROI vs CAGR
Simple ROI
- • Total return over entire period
- • Doesn't account for time
- • Good for single-period investments
- • Can be misleading for long-term comparisons
CAGR (Annualized)
- • Average return per year
- • Accounts for compounding
- • Better for comparing investments of different durations
- • Standard measure for long-term performance
Example: Why CAGR Matters
Compare two investments that both turned $10,000 into $20,000 (100% simple ROI):
Investment A achieved the same total return in less time, making it the better investment when comparing on an annual basis.
Inflation and Real Returns
A 10% nominal return doesn't mean you're 10% wealthier if inflation was 8%. Real return = Nominal return - Inflation. Always consider inflation-adjusted returns when evaluating long-term investments, especially for retirement planning.
Disclaimer
This calculator provides estimates for educational purposes. Past performance does not guarantee future results. Investment returns can vary and may include risk of loss. Consider consulting a financial advisor for personalized investment advice.