ROI Calculator

What ROI tells you — and what it doesn’t

ROI is one of the most widely used financial metrics because it is simple and intuitive. But a raw ROI figure ignores time: a 50% return over 10 years is far less impressive than 50% in 2 years. That is why this calculator also computes the annualised ROI (CAGR) whenever you provide the holding period.

When to use ROI vs CAGR

• Use ROI when comparing investments held for the same duration, or when time is not a factor (e.g., a single marketing campaign).
• Use CAGR when comparing investments held for different periods, evaluating mutual fund performance, or setting long-term wealth targets.

Common pitfalls in ROI analysis

• Ignoring transaction costs — brokerage, taxes, and fees can significantly erode returns, especially on short-term trades.
• Survivorship bias — successful investments are remembered; failed ones are forgotten, making average reported ROIs misleadingly high.
• Nominal vs real — always sanity-check nominal returns against inflation to see if purchasing power actually increased.

Common use cases

Investors use this calculator to compare returns across different asset classes — for example, whether a fixed deposit at 7% over 3 years outperforms a mutual fund that grew 28% in the same period (it doesn't: 28% ROI annualises to ~8.6% CAGR). Business owners evaluate marketing spend ROI by entering campaign cost and attributable revenue. Freelancers track the return on purchasing equipment or courses by dividing additional income generated by the upfront cost. Real estate investors calculate ROI on rental properties by combining rental yield with price appreciation over the holding period.