Investment Return (ROI)
Measure what an investment actually earned — total and per year — so you can compare apples to apples.
Annualized return is the fair way to compare investments held for different lengths of time.
How to use this calculator
- Enter what you invested and its value nowYour initial amount and the current or sale value.
- Enter the holding periodHow long you've held the investment, in years.
- Compare the annualized returnUse annualized — not total — to compare investments held for different lengths of time.
Return on investment (ROI) answers the most basic question in investing: did this make money, and how much? The simple version — gain divided by what you put in — is easy. The version that actually helps you decide is the annualized return, which lets you compare investments held for different lengths of time on equal footing.
Total vs. annualized return
Suppose $10,000 grows to $16,000. That is a 60% total return — but the headline number hides the timeline. If it took five years, the annualized return is about 9.9% a year; if it took fifteen years, only about 3.2% a year. Same total, very different quality. Always compare investments by their annualized return, never by the raw total, or you will mistake a slow winner for a fast one.
What ROI does not tell you
ROI is a scoreboard, not a full judgment. It ignores risk (a 9% return from a volatile stock is not the same as 9% from a bond), fees and taxes (which quietly subtract from every result), and timing of cash flows (adding money along the way changes the true rate). Use ROI to compare outcomes, then layer in those factors before drawing conclusions.
A worked example
Invest $10,000, watch it grow to $16,000 over 5 years, and the calculator shows a 60% total return, a $6,000 profit, and a 9.9% annualized return — a figure you can line up directly against a savings rate, an index fund's historical average, or another opportunity. Change the holding period above to see how time reshapes the annual figure.