ROI calculator

Total return is for bragging, annualized is for deciding

Any time someone quotes an investment result as a bare percentage, your first question should be "over how long?" Total ROI ignores time entirely, and time is what makes a return good or bad. That is why the years field on this page, though optional, is the input that turns the tool from a scorekeeper into a decision aid. The CAGR figure it enables is the honest per-year growth rate, the number you can set beside a bond yield, a savings APY, or a market index average and compare like with like.

CAGR is also the antidote to a common self-deception with long-held assets. A house, a collection, or an old stock position that "tripled" feels like a triumph, but tripling over 25 years is a 4.5% annual rate, roughly what boring instruments paid over many such stretches. Run every legacy holding you own through this with its true holding period; the results reorganize portfolios more effectively than any lecture.

A practical input note: put the all-in cost in the invested field, purchase price plus commissions, closing costs, improvements, whatever it truly took. And use net proceeds, after selling costs, as the final value. ROI flatters or punishes depending on which costs you conveniently forget, and the formula cannot see the ones you leave out.

A rental property example

Say you put $25,000 into a property position in 2018 and its net value today, eight years later, is $61,000. The gain is $36,000, the total ROI is +144%, and the growth multiple is 2.44x. Enter 8 in the years field and the annualized figure comes out to +11.8% per year, since 1.118 raised to the eighth power is 2.44. That is a genuinely strong result, comfortably above long-run stock market averages, and now it is expressed in a unit you can actually compare against the alternative uses that money had.

The two formulas at work

Total ROI is the gain divided by the amount invested, times 100, with the formula line under the result restating your exact numbers. The annualized figure is the compound annual growth rate: the final value over the cost, raised to the power of one over the years, minus one. Fractional years are fine, so an 18-month hold is 1.5. Both round to two decimals, losses display with a minus sign and negative dollars, and if you leave years blank or zero the CAGR slot simply shows a dash rather than fabricating a rate. The multiple is final value over cost, useful when the percentage grows too large to feel intuitive.

What simple ROI cannot capture

This is one-lump-in, one-value-out math. If you added money along the way, reinvested dividends, or drew income out, the single-number CAGR here misstates your true return, sometimes badly, because each cash flow really has its own holding period. It also knows nothing about risk: a 12% annualized return achieved with leverage or concentration is not the same achievement as 12% from a diversified index, even though this page scores them identically. Inflation and taxes are likewise absent, and both take real bites over long holds. Treat the output as the starting point for comparison, not the final word on whether an investment was wise.