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Calcenta

ROI Calculator

Calculate return on investment and, more usefully, the annualised return that lets you compare one investment against another.

ROI Calculator

Commissions, platform fees, maintenance, tax paid along the way.

What the same money could have earned elsewhere. A broad index fund has averaged around 7% after inflation.

Total return

50.0%

Gain of $5,000 on $10,000 over 5 years

Net profit

$5,000

Annualised (CAGR)

8.45%

The comparable figure

Total cost

$10,000

vs benchmark

$974

At 7% a year

This beat the benchmark. The same $10,000 at 7% a year would be worth $14,026, so you are $974 ahead.

Where the return comes from

  • Amount invested$10,000
  • Total cost$10,000
  • Final value$15,000
  • Net gain$5,000
  • Total return50.00%
  • Annualised return8.45%

The annualised figure is the one worth quoting. A 50% total return is excellent over two years and unremarkable over twenty, and the raw percentage cannot tell those apart. Comparing any two investments means comparing their CAGR, not their headline gain.

The link carries the values you entered, so whoever opens it sees the same result. Nothing is stored on our side — the numbers travel in the link itself.

How the roi calculation works

Return on investment is the simplest measure in finance and the easiest to quote misleadingly. The problem is not the formula — it is that ROI has no time in it.

The basic calculation

ROI = (final value − total cost) ÷ total cost

A $10,000 investment now worth $15,000 has returned 50%. Straightforward. But 50% over two years is excellent and 50% over twenty is poor, and the number is identical in both cases.

The figure that actually compares: CAGR

Compound annual growth rate turns any return into an annual one:

CAGR = (final ÷ cost)^(1 ÷ years) − 1

That same 50%:

  • over 2 years → 22.5% a year — exceptional
  • over 5 years → 8.45% a year — good
  • over 20 years → 2.05% a year — worse than inflation

Always quote the annualised figure. It is the only one that lets two investments be compared, and its absence in a pitch is usually deliberate.

Include every cost

The "total cost" is not just the purchase price. Commissions, platform fees, maintenance, insurance and tax paid along the way all reduce what you actually made. A property bought for $200,000 and sold for $260,000 looks like a 30% return until $18,000 of transaction costs, $12,000 of maintenance and $9,000 of tax turn it into 12.8% — and over eight years, 1.5% a year.

Compare against the alternative

A positive return is not automatically a good one. The relevant question is what the same money would have done elsewhere. The calculator compares your result against a benchmark rate — 7% by default, roughly the long-run real return of a broad stock index.

An investment returning 4% a year over a decade more than doubled your money in nominal terms, and still left you well behind a passive index fund. Both facts are true, and only the second one is decision-useful.

What ROI cannot tell you

Risk. Two investments returning 8% a year are not equivalent if one could have gone to zero. ROI is backward-looking and says nothing about the range of outcomes that were possible.

Cash flow timing. If money went in and out at different points, ROI treats it all as though it arrived on day one. For irregular contributions you need IRR (internal rate of return), which is a different calculation.

Inflation. A 4% return during 6% inflation is a real loss, however positive the number looks. Set the benchmark to the inflation rate to see whether you actually gained purchasing power.

Disclaimer: This calculator provides estimates for informational purposes only and is not financial advice. Your actual rate, taxes, fees, and payment will vary - confirm figures with a licensed lender or financial professional.

Frequently asked questions

What is a good ROI?

It depends entirely on the time period and the risk, which is why the raw number is nearly useless on its own. As a benchmark, a broad stock index has returned roughly 10% a year nominally and about 7% after inflation over the long run. Any investment should be judged against what the same money would have earned in an index fund carrying less risk and needing no effort.

What is the difference between ROI and annualised return?

ROI is the total return over the whole holding period and contains no time information. Annualised return, or CAGR, converts that into a per-year rate, which is what makes two investments comparable. A 50% total return is 22.5% a year over two years and 2.05% a year over twenty - the same ROI describing two completely different outcomes.

Should I include fees and taxes in the calculation?

Yes, or the result flatters the investment. Purchase commissions, ongoing platform or management fees, maintenance costs and any tax paid along the way all come out of what you actually made. On property in particular, transaction and holding costs often halve the apparent return. Enter them in the costs field above so the figure reflects money rather than paper.

How do I calculate ROI when I added money over time?

Not with this calculator, honestly. ROI assumes a single amount invested at the start; if contributions arrived at different times, each one was invested for a different length of time and a simple ROI overstates or understates the result. What you need is the internal rate of return, which accounts for the timing of every cash flow. Spreadsheet functions such as XIRR do exactly this.

Does ROI account for inflation?

Not by default - the figures above are nominal. A 4% return during 6% inflation is a real loss of about 2% a year, even though the balance went up. To see the real picture, set the benchmark rate to the inflation rate: if your investment trails it, you lost purchasing power regardless of what the balance says.

Can ROI be negative?

Yes, and the calculator reports it rather than clamping to zero. A negative ROI simply means the final value is below the total cost, including fees. The annualised figure will also be negative, showing the average yearly rate of loss - which is often more informative than the headline, because it makes a slow persistent loss look as bad as it is.

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