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ROI & CAGR Calculator: Return on Investment

ROI is the gain divided by the amount invested. $10,000 growing to $16,000 is a $6,000 gain, a 60% ROI. Over 5 years that's a compound annual growth rate (CAGR) of 9.86%.

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Include dividends or other income received in the final value.

Return on investment

+60%

Annual growth (CAGR)

9.86%

Gain

$6,000.00

Show the math

  1. 1

    Gain = final − initial

    $16,000.00 − $10,000.00 = $6,000.00

    = $6,000.00

Read the steps as text
  1. Gain = final − initial. $16,000.00 − $10,000.00 = $6,000.00
  2. ROI = gain ÷ initial. $6,000.00 ÷ $10,000.00 × 100 = 60% Return on investment is the total change, regardless of how long it took.
  3. CAGR = (final ÷ initial)^(1 ÷ years) − 1. ($16,000.00 ÷ $10,000.00)^(1 ÷ 5) − 1 = 1.6^0.2 − 1 = 9.86% The compound annual growth rate is the steady yearly return that turns the starting value into the final value over the same period.
  4. Check. $10,000.00 × 1.098561^5 = $16,000.00

Return on investment

ROI measures the total gain or loss as a percentage of what you put in: (final value − amount invested) ÷ amount invested × 100. It's simple and works for anything from stocks to a home renovation, but it ignores time. A 60% return is great over 5 years and poor over 30.

To compare fairly, include everything: dividends and interest received belong in the final value, and fees or other costs belong in the amount invested.

Compound annual growth rate

CAGR turns a total return into an equivalent steady yearly rate: (final ÷ initial)^(1 ÷ years) − 1. For $10,000 growing to $16,000 over 5 years, 1.6^0.2 − 1 = 9.86% a year. Growing at exactly 9.86% every year for 5 years would produce the same result.

CAGR is lower than the simple average (60% ÷ 5 = 12%) because each year's growth compounds on the last. It's the standard way to compare investments held for different lengths of time, though it hides how bumpy the ride was.

Frequently asked questions

How do I calculate ROI?
Subtract the amount invested from the final value, divide by the amount invested and multiply by 100. ($16,000 − $10,000) ÷ $10,000 × 100 = 60%.
What's the difference between ROI and CAGR?
ROI is the total return over the whole period. CAGR is the equivalent yearly rate, which lets you compare investments held for different lengths of time.
Can ROI be negative?
Yes. A loss gives a negative ROI: $1,000 falling to $800 is −20%. Over 2 years that's a CAGR of −10.56% a year.
What is a good ROI?
It depends on risk and time. For context, broad US stock market returns have averaged roughly 10% a year before inflation over the long run, with large swings from year to year.

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