📊 ROI Calculator
Calculate your return on investment as a percentage, net return, and investment multiplier. Use Annualized ROI mode to calculate CAGR for multi-year investments.
ROI
+45.00%
Net Return
$4,500.00
Multiplier
1.45×
📊 Common ROI Benchmarks
S&P 500 (historical)
~10%/yr
Real estate
8–12%/yr
High-yield savings
4–5%/yr
Bonds (US Treasury)
4–5%/yr
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Send FeedbackWhat is Return on Investment (ROI)?
ROI is a performance metric used to evaluate the efficiency of an investment or compare the efficiency of several different investments. It measures the amount of return relative to the investment's cost.
ROI Formula: ROI (%) = [(Final Value − Initial Investment) / Initial Investment] × 100
Example: You invest $10,000. It grows to $14,500. ROI = [(14,500 − 10,000) / 10,000] × 100 = 45%
What is CAGR (Compound Annual Growth Rate)?
CAGR represents the mean annual growth rate of an investment over a period of more than one year. Unlike total ROI, CAGR accounts for the time value of money and allows fair comparison between investments of different durations.
CAGR Formula: CAGR = (Final Value / Initial Value)^(1/years) − 1
Example: $10,000 grows to $15,000 over 5 years. CAGR = (15,000 / 10,000)^(1/5) − 1 = 8.45% per year
ROI vs CAGR: Which Should You Use?
- ROI — best for short-term investments, marketing campaigns, or any situation where you just want the total return percentage.
- CAGR — best for long-term investment comparison. A 100% ROI sounds great, but if it took 20 years, that's only 3.5% CAGR — worse than a savings account.
Common ROI Use Cases
- Stock market: Did this stock outperform the index?
- Real estate: Was my rental property worth buying?
- Business investment: Did this marketing campaign pay off?
- Education: Does getting an MBA improve lifetime earnings enough to justify the cost?
- Home improvement: Will this renovation add more value than it costs?
Frequently Asked Questions
What is a good CAGR for stocks?
The S&P 500 index has delivered approximately 10% CAGR over the long term (since 1957), or about 7% after inflation. Individual stock portfolios targeting 12–15% CAGR are considered excellent. Anything above 20% consistently over many years is exceptional.
Can ROI be negative?
Yes. A negative ROI means you lost money on the investment. For example, investing $10,000 and ending up with $8,000 is a −20% ROI.
Does ROI account for risk?
No — ROI only measures return, not risk. Two investments can have the same ROI but very different risk profiles. Use risk-adjusted metrics like the Sharpe ratio or risk-adjusted return for a more complete picture.