ROI Calculator

What is ROI?

Return on Investment (ROI) measures how much profit (or loss) you made relative to what you put in. It's the most common way to evaluate whether an investment — in stocks, real estate, a business, or even education — was worth it.

The ROI formula

ROI = (Final Value − Initial Cost) / Initial Cost × 100%

A $10,000 investment that grows to $15,000 has a total ROI of 50%. But "50% over 3 years" tells you something very different than "50% over 10 years." That's where the annualized return (CAGR) comes in.

CAGR: the only fair comparison

Compound Annual Growth Rate (CAGR) shows what your average yearly return would have been if growth had been steady. It lets you compare investments held for different lengths of time. Use CAGR — not total ROI — when comparing a stock you held for 2 years against a house you owned for 15.

Realistic return benchmarks

• S&P 500 (long-term average): ~10% per year (before inflation)
• Real estate: ~4–8% per year (plus rental income)
• Bonds: ~4–6% per year
• High-yield savings: ~4–5% APY (as of 2026)
• Inflation (historical average): ~3% per year

What ROI doesn't capture

• Taxes: capital gains taxes reduce your actual return.
• Inflation: a 7% nominal return is only ~4% real return at 3% inflation.
• Risk and volatility: a smooth 8% is very different from an 8% average with wild swings.
• Time and effort: especially for business or real estate investments.