📊 ROI & CAGR Calculator

Calculate your total return on investment (ROI) and compound annual growth rate (CAGR).

Initial Investment ($)

Final Value / Current Market Value ($)

Holding Period (years)

📖 ROI vs CAGR: What's the Difference?

ROI (Return on Investment) is your total return — how much you gained or lost in total, expressed as a percentage.

CAGR (Compound Annual Growth Rate) is your annualized return — it smooths out the total return into a yearly rate, making it easy to compare investments of different durations.

💡 CAGR is the more important number. Earning 50% over 3 years (CAGR ~14.5%) is much better than earning 50% over 10 years (CAGR ~4.1%).

📐 The Formulas

ROI (%) = (Final Value − Initial Investment) / Initial Investment × 100

CAGR (%) = [(Final Value / Initial Investment)^1/years − 1] × 100

📝 Example

You invested $50,000 in an S&P 500 index fund. After 5 years, it's worth $120,000:

Total ROI = ($120,000 − $50,000) / $50,000 × 100 = 140%
CAGR = ($120,000 / $50,000)^1/5 − 1 = 2.4^0.2 − 1 ≈ 19.1% annually

📊 Common Benchmarks

High-yield savings account: ~4-5% (risk-free, nominal)
S&P 500 long-term average: ~10% annual (before inflation)
Warren Buffett (Berkshire Hathaway): ~20% annual over 50+ years
Typical real estate appreciation: ~3-5% annual

❓ FAQ

Is a 10% annual return good?

Yes. 10% annually matches the long-term S&P 500 average and doubles your money roughly every 7 years. Most professional fund managers don't beat this consistently.

Should I include dividends in the calculation?

Yes. For a fair comparison, the final value should include reinvested dividends. If you received $2,000 in dividends and reinvested them, add that to the final value.

What if my ROI is negative?

A negative ROI means you lost money. The calculator will show exactly how much. For long-term investing, temporary drawdowns are normal — the S&P 500 has had negative years about 27% of the time.

How do I compare two different investments?

Use the CAGR for each investment. The one with the higher CAGR delivered better annualized returns. Always compare over the same time period.