ROI Calculator
Total ROI, annualized return (CAGR), and payback period in one place. Compare any two investments on equal footing — the way the pros do.
Investment details
The amount of money you put in at the start.
What the investment is worth today (or when sold).
How long you've held or will hold the investment. Use decimals for partial years (0.5 = 6 months).
Returns
Total ROI
50.00%
Net gain: $5,000.00
Annualized ROI
14.47%
CAGR (compound annual)
Payback Period
6.00 years
at the average annual gain rate
💡 Total ROI vs Annualized ROI
A 50% total return over 3 years sounds great until you realize it's only ~14.5% annualized. Always compare investments by annualized ROI, not total ROI.
Why total ROI lies
Imagine two investments, both turning $10,000 into $15,000. They sound identical:
| Investment | Held for | Total ROI | Annualized ROI |
|---|---|---|---|
| A | 2 years | 50% | 22.5% |
| B | 10 years | 50% | 4.1% |
Same money in, same money out. But Investment A returned 22.5% per year — beating the stock market. Investment B returned 4.1% per year — losing to inflation. Annualized ROI is the only number that lets you compare them fairly.
The formulas
Total ROI = ((Final Value − Initial) / Initial) × 100 Annualized ROI = ((Final / Initial)^(1/years) − 1) × 100 Payback Period = Initial / (Total Gain / years)
Three things ROI doesn't tell you
- 1. Risk. A 30% annualized return on stable bonds is wildly different from 30% on a single startup investment. ROI is the outcome; risk is the distribution of possible outcomes.
- 2. Liquidity. 15% ROI is great — unless the investment is locked up for 10 years and you need the money next year.
- 3. Inflation. 5% nominal ROI during 6% inflation is actually a real loss of 1% per year. Always compare to inflation when planning long-term.
Frequently asked questions
What's the difference between ROI and annualized ROI?▼
Total ROI is the cumulative return over the full holding period. Annualized ROI (also called CAGR — compound annual growth rate) is the equivalent yearly return that would have produced the same total. Always use annualized ROI when comparing investments held for different lengths of time.
What's a good ROI?▼
Highly context-dependent. The S&P 500 averages about 10% annualized. Real estate runs 8-12% annualized in many markets. Marketing campaigns often target 3-5x ROAS (300-500% ROI) per cycle. For business investments, anything above your cost of capital (typically 8-15%) is theoretically worth doing.
What's payback period?▼
How long it takes for the cumulative gains to equal the initial investment. A shorter payback period means lower risk — you recover your money faster. For business expansions, a payback under 18 months is generally considered healthy.
Does this calculator account for inflation?▼
No — it calculates nominal returns. To get the real (inflation-adjusted) return, subtract the inflation rate from the annualized ROI. If you got 8% annualized and inflation was 3%, your real return is roughly 5%.
How do I calculate ROI for a marketing campaign?▼
Treat the campaign spend as Initial Investment and the revenue (or profit) attributed to the campaign as Final Value. Use the campaign duration as the holding period. Most marketers track ROAS (return on ad spend) instead, which is revenue ÷ spend — a 4x ROAS is a 300% ROI.