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ROI Calculator

Measure the profitability of an investment relative to its cost.

$
$
Years
How It Works: ROI (Return on Investment) measures the profitability of an investment relative to its cost. CAGR (Compound Annual Growth Rate) shows the annualized return.

Key Inputs:
  • Amount Invested: Your initial investment or cost basis.
  • Amount Returned: Current value or sale price.
  • Time Period: Years held (used to calculate annualized return).


Formulas:
  • ROI: (Final Value - Initial Cost) ÷ Initial Cost × 100%
  • CAGR: (Final Value ÷ Initial Cost)^(1/Years) - 1

Use Cases: Compare investment performance, evaluate business ventures, analyze real estate returns, or assess any financial decision.
Total Return (ROI)
50.00%
Net Profit
$5,000
Annualized Return
14.47%

Compound Annual Growth Rate (CAGR)

ROI is Deceptive: Why Time Matters (ROI vs. CAGR)

"I made a 100% return!" sounds amazing, but context is everything. Doubling your money in 1 year is legendary. Doubling your money in 30 years is barely beating inflation. This is why ROI (Return on Investment) can be misleading without factoring in Time.

Enter CAGR (Compound Annual Growth Rate)

CAGR is the "truth serum" of investing. It smooths out the volatility and tells you what your annual growth rate would be if it were steady every single year.

The Rule of 72

Want to know how long it takes to double your money? Divide 72 by your annual return rate.

• At 10% return (S&P 500 avg), money doubles in 7.2 years.
• At 2% return (High Yield Savings), money doubles in 36 years.

Inflation: The Invisible Thief

If your investment gains 5% in a year, but inflation is 3%, your Real Return is only roughly 2%. Always aim for investments that significantly outpace inflation to build actual purchasing power wealth.

Disclaimer: Past performance is not indicative of future results. All investments carry risk.