ROI Calculator
Calculate total ROI, annualized CAGR, capital gain, and dividend income for any investment given the initial amount, final value, dividends, and holding period.
years
Enter your values above to see the results.
Tips & Notes
- ✓Always include dividends in your ROI calculation — ignoring income distorts the true return and makes income-producing investments appear to underperform growth stocks.
- ✓Compare your CAGR against relevant benchmarks such as the S&P 500 index fund for equity investments — absolute returns mean nothing without a comparison point.
- ✓A 100% ROI means you doubled your money, but the CAGR depends entirely on how long it took — 10 years produces 7.2% annually while 3 years produces 26%.
- ✓Adjust for inflation to find real returns — a 10% CAGR in a 3% inflation environment is only 7% real growth in purchasing power.
- ✓Include all costs in the initial investment figure — commissions, advisory fees, and taxes on gains all reduce true ROI and should be accounted for in any honest calculation.
- ✓Use CAGR when comparing investments across different time periods — simple percentage returns are misleading when holding periods differ by even a year or two.
Common Mistakes
- ✗Calculating ROI without including dividends or other income — ignoring a 3% annual dividend yield understates total return by 15%+ on a 5-year hold.
- ✗Comparing simple percentage returns across different time periods without annualizing — a 50% gain over 2 years is far better than a 50% gain over 10 years.
- ✗Not adjusting for investment costs when calculating ROI — a 12% gross return with 1.5% in annual fees is only a 10.5% net return, which compounds to a large difference over time.
- ✗Treating CAGR as a guarantee of future performance — past CAGR describes what happened, not what will happen, and individual stock returns are highly variable.
- ✗Forgetting to account for taxes on capital gains — a 20% long-term capital gains rate on a $20,000 gain costs $4,000, reducing actual ROI significantly.
- ✗Comparing your investment ROI against the wrong benchmark — equity investments should compare against equity benchmarks, not against savings account rates.
ROI Calculator Overview
An ROI calculator answers the fundamental investment question: how much did this actually make? It separates capital gain (price appreciation) from income (dividends), combines them into total return, and annualizes that return into a CAGR that makes comparison across any two investments straightforward regardless of time period.
Most investors track portfolio value but never calculate their actual annualized return — which means they cannot honestly compare their results against any benchmark.
What each field means:
- Initial Investment — the original amount invested, including any purchase costs
- Final Value — the current or sale value of the investment
- Annual Dividends — income received per year from the investment; enter 0 if none
- Years — the total holding period; used to annualize the return into CAGR
What your results mean:
- Total ROI — the complete percentage return on the original investment including all sources of gain
- Annualized ROI (CAGR) — the equivalent steady annual return that produced the total ROI over the holding period
- Total Gain — the dollar amount earned above the original investment
- Capital Gain — the appreciation in value alone, excluding dividend income
- Total Income — all dividends received over the full holding period
Example — $20,000 invested, now worth $31,500, $600/year dividends, 5-year hold:
Initial investment: $20,000 Final value: $31,500 Capital gain: $11,500 (57.5%) Total dividends received: $600 x 5 = $3,000 Total gain: $11,500 + $3,000 = $14,500 Total ROI: $14,500 / $20,000 = 72.5% CAGR: (1 + 0.725)^(1/5) - 1 = 11.5% per year Benchmark comparison: S&P 500 at 7% CAGR over same period would have turned $20,000 into $28,051 This investment outperformed by $3,449 over 5 years.
EX: How dividend income changes the total ROI picture Stock A: $10,000 invested, grows to $14,000, no dividends over 5 years Total ROI: 40% | CAGR: 6.96% Stock B: $10,000 invested, grows to $12,500, $400/year dividends over 5 years Total ROI: $2,500 gain + $2,000 dividends = $4,500 = 45% | CAGR: 7.74% Stock B appears to perform worse on price alone but outperforms when total return is calculated. Always include dividends to compare investments accurately.
CAGR benchmarks — what to compare your result against:
| Benchmark | Historical CAGR | $10,000 over 20 years |
|---|---|---|
| US savings account | ~0.5% | $11,049 |
| US bonds (aggregate) | ~3.5% | $19,898 |
| S&P 500 index | ~10% nominal / ~7% real | $67,275 nominal |
| Global equity index | ~8% nominal | $46,610 |
ROI by gain and holding period:
| Total ROI | CAGR over 5yr | CAGR over 10yr | CAGR over 20yr |
|---|---|---|---|
| 50% | 8.45% | 4.14% | 2.05% |
| 100% | 14.87% | 7.18% | 3.53% |
| 200% | 24.57% | 11.61% | 5.65% |
| 500% | 43.10% | 19.62% | 9.33% |
The CAGR is the only honest way to compare investments held for different time periods. A 100% gain over 5 years (14.87% CAGR) is a fundamentally different result than a 100% gain over 20 years (3.53% CAGR), even though the total ROI percentage is identical. Always annualize returns before comparing them against any benchmark or alternative investment.
Frequently Asked Questions
Context determines what is good. For equity investments, a CAGR above 7-10% beats the historical real return of the broad market and is considered strong. For real estate, 8-12% total return including rental income and appreciation is typical in most markets. For business investments, ROI should exceed the cost of capital — typically 15-25% for privately held businesses. For savings products, 4-5% in current high-yield environments is competitive. The most useful comparison is always against what you could have earned in a low-cost index fund over the same period.
ROI is the total percentage gain on an investment over the entire holding period, regardless of time. A $10,000 investment that grows to $20,000 with $2,000 in dividends has a total ROI of 120%. CAGR is the annualized version — the equivalent steady annual return that produced that total gain. The same $12,000 gain over 10 years corresponds to a CAGR of 8.3%. ROI measures magnitude; CAGR measures efficiency per year. Always use CAGR when comparing investments held for different time periods.
Dividends can substantially increase total return. A stock that appreciates 40% over 5 years with a 3% annual dividend yield produces a total ROI of approximately 58% — nearly 50% more than the price appreciation alone. Historically, dividends have contributed roughly 40% of the total return of the S&P 500 over long periods. Reinvesting dividends through a DRIP program amplifies this further through compounding. When comparing stocks or funds, always use total return (price appreciation plus dividends) rather than price return alone.
Rental property ROI requires combining multiple return sources. Cash-on-cash return is annual net rental income divided by the cash invested (down payment plus closing costs). Total ROI adds appreciation in property value over the holding period. Cap rate is annual net operating income divided by total property value. A complete calculation would include: annual rental income minus expenses minus mortgage payments equals cash flow; add equity built through appreciation and mortgage paydown; divide total gain by cash invested. Typical well-performing rental properties produce 8-12% total annual return depending on market and financing.
Yes — a negative ROI means the investment lost value. If you invest $10,000 and the investment falls to $7,500 with no income, ROI is -25%. Negative ROI is common in individual stocks, speculative assets, and poorly executed business investments. For diversified equity portfolios, negative ROI over periods of 15+ years has been historically rare but not impossible. The risk of negative ROI is one reason diversification across many assets and asset classes is the foundational principle of long-term investing — it limits the damage any single loss can do to overall portfolio performance.
In business, ROI is the primary filter for capital allocation decisions — which projects, equipment, or initiatives to fund. A business calculating ROI on a marketing campaign divides net profit generated by the campaign cost. For equipment purchases, ROI compares the net savings or revenue increase against the equipment cost over its useful life. A project with a positive ROI above the cost of capital creates value; below it destroys value. Businesses typically set a minimum required ROI called a hurdle rate — often 15-25% for internally funded projects — and only approve investments that clear it.