It depends entirely on the time horizon and risk level. As an annualized benchmark: savings accounts 4–5%, bonds 4–6%, S&P 500 historical average ~10% CAGR, real estate 6–9% CAGR total return, private equity 15–25%. Higher returns should come with higher risk — be skeptical of investments promising high returns with claimed low risk.

What is the difference between ROI and CAGR?

ROI is the total percentage return over the entire holding period. CAGR (Compound Annual Growth Rate) annualizes that return, allowing fair comparison across different time horizons. A 100% ROI over 2 years (41.4% CAGR) is very different from a 100% ROI over 10 years (7.2% CAGR).

Should I include all costs when calculating ROI?

Yes — always include all costs: purchase price, transaction costs, ongoing fees, taxes, maintenance, and financing costs. Many investors overstate ROI by ignoring transaction costs, carried costs, or taxes. Net ROI after all costs is the only honest measure.

How does ROI differ from IRR?

ROI is simple: (Net Profit / Cost) × 100. IRR accounts for the timing of multiple cash flows over time using discounted cash flow analysis. For investments with a single buy and sell, they tell a similar story. For investments with interim cash flows (rent, dividends, etc.), IRR is more accurate.

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Is This Investment Actually Worth Your Money?

Is this investment worth your money?

What This Does

Return on Investment (ROI) is the most fundamental metric in financial decision-making — it tells you what percentage return you got (or expect to get) on money you deployed. But raw ROI has a critical blind spot: it ignores time. A 50% ROI over 10 years is very different from a 50% ROI over 2 years. That's why this calculator also computes your annualized ROI (CAGR), which allows meaningful comparisons across investments held for different durations. ROI is relevant for every type of investment: stocks, bonds, real estate, business improvements, education, equipment, marketing campaigns, and anything else where you put money in and expect money out. The calculation is always: (Net Return / Cost of Investment) × 100. Net Return = Final Value − Initial Cost. Simple, but the inputs require careful thought. This calculator goes beyond the basic formula. It computes simple ROI, annualized CAGR, net profit in dollars, and compares your return to S&P 500 and bond benchmarks over the same period. It also shows what your money would have grown to in a low-cost index fund — making the opportunity cost of any investment visible and quantifiable. Use it to evaluate any investment decision with clarity.

When Should You Use This?

→Evaluating the historical or projected return on any investment
→Comparing two investments with different costs and time horizons
→Calculating the ROI on a business expenditure (equipment, marketing, hiring)
→Understanding what opportunity cost you're giving up by choosing one investment over another
→Benchmarking your portfolio or individual holdings against index fund performance

Example Scenario

Alex bought rental property for $220,000 in 2018 and sold it for $310,000 in 2024, receiving $54,000 in cumulative net rental income over 6 years. Total proceeds: $364,000. Total invested: $220,000. ROI: 65.5%. Annualized CAGR: 8.8%. The S&P 500 returned about 13.8% CAGR over the same period. Alex's property underperformed the index — though with leverage and different risk characteristics, the comparison is more nuanced.

ROI Calculator

CAGR · Benchmark Comparison · Exit Value & Hold Period Sensitivity

Results update in real time as you adjust any input.

Initial Investment

Total upfront cost, all-in

Final / Exit Value

Sale price or current market value

Interim Income — Total

Dividends, rent, distributions (total)

Holding Period

yrs

Transaction Costs

Commissions, closing costs, fees — added to cost basis

About This Calculator

This ROI calculator computes: Total Cost = Initial Investment + Transaction Costs. Total Proceeds = Final Value + Interim Income. Net Profit = Total Proceeds - Total Cost. ROI = (Net Profit / Total Cost) x 100. CAGR = (Total Proceeds / Total Cost)^(1/years) - 1, converted to percentage. vs S&P 500 = CAGR minus 10%. Break-even exit = Total Cost minus Interim Income. S&P 500 match exit = Total Cost x 1.10^years minus Interim Income. All results update in real time as any of the five inputs changes.

The Returns tab renders a horizontal bar chart of return sources (Initial Investment in red, Exit Value in emerald, Interim Income in indigo, Net Profit in accent or red). The Benchmarks tab renders a line chart of year-by-year value growth for your investment (accent, thick), S&P 500 (amber), bonds (zinc dashed), and HYSA (zinc dotted), plus a bar chart comparing final values at the end of the hold period. The Sensitivity tab renders a bar chart of net profit at 7 exit price multiples (50% to 200% of current exit) — bars below zero appear in red, current exit in accent. A line chart shows how CAGR changes across 11 hold periods (1 to 15 years) with an S&P 500 ReferenceLine at 10%.

ROI score: Loss = 5, Near Flat (CAGR 0-3%) = 22, Weak (3-5%) = 38, Below Market (5-7%) = 52, Acceptable (7-10%) = 65, Market Rate (10%+) = 78, Strong (15%+) = 90, Outstanding (20%+) = 97. Dynamic accent: emerald (Outstanding/Strong), indigo (Market Rate/Acceptable), amber (Below Market/Weak), orange (Near Flat), red (Loss). Two auto-trigger banners: underperforms S&P 500 by more than 3%/yr (red), beats S&P 500 by more than 5%/yr (emerald). Three-tier What To Do Next: strong performance (verify, tax, liquidity, document), loss (post-mortem, tax harvest, position sizing, passive alternative), acceptable/below-market (risk-adjusted analysis, after-cost return, time cost, future benchmarking).

Results are estimates only and do not constitute financial, tax, or legal advice. Always consult a qualified professional before making financial decisions.