ROI Calculator

Calculate your Return on Investment (ROI) to measure the profitability of your investments.

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Enter the number of years for annualized ROI calculation

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About ROI Calculations

Net Profit: The difference between your ending value and initial investment.

Total ROI: The percentage return on your investment, calculated as (Net Profit / Initial Investment) × 100%.

Annualized ROI (CAGR): The compound annual growth rate, which shows the average annual return over the investment period. Formula: ((Ending Value / Initial Investment) ^ (1 / Years) - 1) × 100%.

Why Annualized Return (CAGR) Matters

While simple ROI tells you the total percentage gained, it often fails to account for the time factor. A 50% return over one year is excellent, but a 50% return over ten years is far less impressive. Using the Compound Annual Growth Rate (CAGR) allows investors to compare the efficiency of different assets on an equal playing field, regardless of how long they are held.

Net profit alone can also be misleading if it doesn't account for inflation or opportunity cost. When evaluating long-term investments like real estate or business equity, professional investors always look at the annualized rate to determine if their capital is outperforming standard benchmarks like the S&P 500 or inflation indexes.