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ROI & CAGR Calculator

Turn any starting value, ending value, and holding period into total return, annualized rate of return, and real return after inflation.

Measure Returns the Way Professionals Do

The Three Numbers Every Investor Should Know

Return on investment (ROI): Your total gain as a percentage of what you put in. Sell a $10,000 position for $16,500 and your ROI is 65%. It answers "how much did I make?" but says nothing about how long it took.

Compound annual growth rate (CAGR): The single steady yearly rate that would turn your starting value into your ending value over the holding period. A 65% ROI over five years is a 10.5% CAGR. This is the number to use when comparing investments held for different lengths of time.

Real return: CAGR minus the effect of inflation. It tells you how much purchasing power you actually gained, which is the only reason to invest in the first place.

Key Insight: A friend's "I doubled my money" means a 7.2% annual return if it took ten years, or 41% a year if it took two. Never compare returns without annualizing them first.

The Formulas Behind the Calculator

ROI = (Ending Value − Starting Value) ÷ Starting Value × 100

CAGR = (Ending Value ÷ Starting Value)1 ÷ Years − 1

Real Return = (1 + CAGR) ÷ (1 + Inflation) − 1

The CAGR exponent is what makes the math honest. Dividing a 65% total return by five years gives a "simple average" of 13% a year, but that overstates reality because it ignores compounding. The true compounded rate is 10.5%. The calculator shows both so you can see the gap.

Pro Strategy: Use the same holding period in both the numerator and your benchmark. A 30% gain on a stock you held for three years should be judged against what an index fund did over those same three years, not against its long-run average.

What Counts as a Good Return?

A return is only good or bad relative to the risk you took and the alternatives you gave up. Rough long-run annualized benchmarks, before inflation:

  • High-yield savings / money market: 4-5% (no risk to principal, fully liquid)
  • Investment-grade bonds: 4-6% (modest price swings)
  • US large-cap stocks (S&P 500): about 10% nominal, 7% real, with drops of 30-50% along the way
  • Residential rental real estate: 8-12% including leverage and appreciation, but illiquid and work-intensive

If a "safe" investment promises 12% a year, the risk is there whether or not anyone mentions it. Use the benchmark table in the calculator to see what your starting amount would have become in each of these alternatives over your exact holding period.

Reality Check: Inflation has averaged roughly 3% a year over the past century. Any investment returning less than that is losing purchasing power, no matter how positive the dollar figure looks.

Get the Inputs Right: Net, Not Gross

Ending value should include everything you received: the sale price plus every dividend, interest payment, or rent check along the way. A stock that went nowhere but paid 3% dividends for a decade still returned 3% a year.

Starting value should include everything you paid: purchase price plus commissions, closing costs, renovation spending, or loads. A rental property bought for $250,000 with $8,000 in closing costs and $20,000 in repairs has a $278,000 cost basis.

Subtract ongoing costs from the ending value: fund expense ratios, advisory fees, property management, and the taxes you owe on the gain. Two funds with identical gross returns and a 0.9% fee difference end up about 18% apart after 20 years.

Avoid These Costly Mistakes

  • ❌ Comparing a 3-year ROI to a 10-year ROI without annualizing
  • ❌ Dividing total return by years instead of using the CAGR formula
  • ❌ Forgetting dividends, rent, and interest in the ending value
  • ❌ Ignoring fees, commissions, and taxes that never show up on the statement
  • ❌ Celebrating a nominal gain that inflation has quietly erased
  • ❌ Using simple ROI on a portfolio with monthly contributions (that needs a money-weighted return)

Your Return Analysis Action Plan

  1. Add up your true cost basis, including every fee paid to buy
  2. Add up your true ending value, including every dollar of income received
  3. Enter the exact holding period in years and months
  4. Read the CAGR, not the total ROI, when comparing options
  5. Check the real return against inflation to see if you actually got ahead
  6. Compare against the benchmark table to judge whether the risk paid off

Frequently Asked Questions

ROI is the total percentage gain over the whole holding period; CAGR is the smoothed yearly rate that would produce that gain. A 50% ROI sounds great, but if it took 10 years the CAGR is only 4.1% per year, worse than a plain index fund. Always annualize before comparing investments held for different lengths of time.
Divide your gain by what you put in: (ending value minus starting value) divided by starting value. To annualize it, raise (ending value divided by starting value) to the power of 1 divided by years, then subtract 1. Enter your two values and the holding period above and the calculator does both steps for you.
For long-term stock investments, roughly 7-10% per year before inflation is the historical benchmark; anything consistently above that is exceptional. Judge ROI against the risk you took and the alternatives you gave up. A 5% annual return from a bond is solid; the same 5% from a speculative startup is poor compensation for the risk of losing everything.
Only if you fold them into your ending value. Add reinvested dividends and rental income to the final value, and subtract fees, commissions, and taxes paid, to get your true net return. Ignoring a 1% annual fee overstates a 20-year return by roughly 18% of the ending balance.
Simple ROI breaks down once cash flows in and out on different dates, so use a money-weighted return (IRR) instead. This calculator handles the single-lump-sum case exactly. For contributions or withdrawals on different dates, use our IRR & XIRR Calculator, which solves for the money-weighted return.
Real return is your annualized return minus inflation, showing how much purchasing power you actually gained. A 7% nominal return during 3% inflation is roughly a 3.9% real return. Enter an inflation rate in the calculator to see your real CAGR alongside the nominal figure.

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