Why does annualized ROI matter?

A 40% return over 1 year is very different from a 40% return over 10 years. Annualized ROI normalizes the result per year so you can compare investments with different holding periods fairly.

Does this account for taxes or fees?

No. This is a gross return calculation. Taxes, transaction fees, and inflation will reduce your real, take-home return.

ROI Calculator (Return on Investment)

Calculate the percentage return on an investment, plus the annualized return if you held the investment for more than one year.

Net gain / loss

How this calculator works

Total ROI is calculated as ROI (%) = (Final Value − Initial Investment) / Initial Investment × 100. When a holding period in years is provided, the annualized ROI is also calculated as ((Final Value / Initial Investment)^(1/years) − 1) × 100, which lets you fairly compare investments held for different lengths of time.

Formula reference: Investopedia: Return on Investment (ROI)

Example

Example: an investment of $8,000 that grows to $11,200 over 3 years has a total ROI of 40% and an annualized ROI of about 11.9% per year.

Frequently asked questions

Why does annualized ROI matter?: A 40% return over 1 year is very different from a 40% return over 10 years. Annualized ROI normalizes the result per year so you can compare investments with different holding periods fairly.
Does this account for taxes or fees?: No. This is a gross return calculation. Taxes, transaction fees, and inflation will reduce your real, take-home return.

This calculator provides estimates for general informational purposes only and does not constitute financial, tax, or legal advice. Always confirm important numbers with a qualified professional or your lender/institution before making a decision.