Return on Investment (ROI) measures the total gain or loss relative to the initial cost. Formula: ROI (%) = ((Final - Initial) / Initial) * 100. CAGR (Compound Annual Growth Rate) measures the annualized return over multiple years. Formula: CAGR (%) = [(Final / Initial)^(1 / Years) - 1] * 100.

Measure your investment performance like a pro.

Formula

ROI = (Final - Initial) / Initial. CAGR = (Final / Initial)^(1 / t) - 1. (t = years).

How It Works

Enter the amount you originally invested (Initial Value).
Input the current or selling price of the asset (Final Value).
Set the number of years between the two values.
Review your Total ROI vs. Annualized CAGR to measure true performance.

Formula:

CAGR = [(Final / Initial)^(1 / Years)] - 1

Examples

Invested $10,000 in 2018. Value in 2023 is $18,000.

Result: Total ROI: 80%. CAGR: 12.47%.

A stock doubles ($100 to $200) in 7 years.

Result: Total ROI: 100%. CAGR: 10.4%.

Frequently Asked Questions

Why is CAGR better than total ROI?

ROI doesn't show how long it took to get the profit. 50% ROI in 1 year is great; 50% ROI in 50 years is very poor. CAGR solves this by annualizing the rate.

Can CAGR be negative?

Yes, if the final value is lower than the initial value, your CAGR will be negative, representing an annualized loss.

Does this account for inflation?

No, this is a "Nominal" return calculator. To see inflation-adjusted value, use our Inflation & Purchasing Power calculator.

Key facts

ROI provides a snapshot of absolute performance, while CAGR accounts for the time value of money. A high ROI over a long period might yield a surprisingly low CAGR (e.g., 100% ROI over 10 years is only 7.18% CAGR). Realized returns should always be compared against benchmarks like the S&P 500 (avg 8-10% CAGR). Calculation does not account for dividends or taxes unless manually added to the final value.

Trend & Behavior Analysis

Investment growth is exponential. Due to compounding, the line chart typically curves upward (convex) over time. Missing just a few years of compounding in a 20-year horizon can significantly reduce the final terminal value.