What this calculator does
Return on investment answers a simple question, what did this turn into, but the raw percentage hides the time it took. A 50% gain is excellent over two years and mediocre over fifteen. This calculator reports both the total return and the annualised equivalent, so investments held for different lengths can be compared properly.
It also separates income from capital gain. Rent, dividends and interest received along the way are part of the return even though they never appear in the final sale price, and leaving them out understates income-producing assets substantially.
The formula
Total return divides the gain, including income, by what was originally invested. Annualising converts that total into the constant yearly rate that would produce the same result over the same period: which is what makes different holding periods comparable.
| Term | Meaning |
|---|---|
| ROI | Total return over the whole holding period. |
| Annualised | The equivalent constant yearly rate. |
| Income | Cash received while holding: dividends, rent, coupons. |
The inputs explained
| Field | What to enter |
|---|---|
| Amount invested ($) | The total amount you put in, including purchase costs and brokerage. |
| Amount returned ($) | What the investment is now worth, or what you sold it for after selling costs. |
| Income received (dividends, rent) ($) | Cash received during the holding period. Enter zero if there was none. |
| Holding period (years) | How long you held it, in years. Use decimals for part-years. |
When to use it
Comparing investments held for different periods
A property held twelve years and a share position held two cannot be compared on total return. The annualised column puts them on the same footing.
Assessing a property including rent
Purchase price in, sale price out, and net rent received in the income field. The result is the total return on the property rather than just the capital growth.
Judging a business project
Enter the amount invested and the value or proceeds generated. For projects with cash flows spread across several years, the NPV and IRR calculator is a better fit.
Setting a benchmark
Compare the annualised figure against what a simple index fund returned over the same period. That is the relevant benchmark for any active decision.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
What different exit values do to a $10,000 investment
A $10,000 investment held for three years with no income, at various exit values.
| Value at exit | Total return | Profit | Annualised return |
|---|---|---|---|
| $8,000 | -20.0% | −$2,000.00 | -7.17% |
| $10,000 | 0.000% | $0.00 | 0.000% |
| $12,000 | 20.0% | $2,000.00 | 6.27% |
| $15,000 | 50.0% | $5,000.00 | 14.5% |
| $20,000 | 100.0% | $10,000.00 | 26.0% |
| $30,000 | 200.0% | $20,000.00 | 44.2% |
The same 50% gain over different holding periods
An identical total return, achieved over different lengths of time.
| Held for | Total return | Annualised return | Doubling time at this rate |
|---|---|---|---|
| 1 year | 50.0% | 50.0% | 1.7 years |
| 2 years | 50.0% | 22.5% | 3.4 years |
| 3 years | 50.0% | 14.5% | 5.1 years |
| 5 years | 50.0% | 8.45% | 8.5 years |
| 10 years | 50.0% | 4.14% | 17.1 years |
| 20 years | 50.0% | 2.05% | 34.2 years |
How income changes the picture
Capital growth alone versus capital growth plus rent received.
| Income received | Total return | Profit | Annualised return |
|---|---|---|---|
| $0 | 30.0% | $30,000.00 | 5.39% |
| $10,000 | 40.0% | $40,000.00 | 6.96% |
| $20,000 | 50.0% | $50,000.00 | 8.45% |
| $30,000 | 60.0% | $60,000.00 | 9.86% |
| $50,000 | 80.0% | $80,000.00 | 12.5% |
Questions
Should I include fees and transaction costs?
Yes. Add purchase costs to the amount invested and subtract selling costs from the amount returned. Fees are a genuine part of the return, and ignoring them systematically overstates results.
Does this account for tax?
No. Tax treatment varies by jurisdiction, asset type and holding period. For an after-tax return, enter the net proceeds and net income after tax.
What is the difference between ROI and CAGR?
ROI is the total return over the whole period. CAGR is the smoothed annual rate that links the start and end values. The annualised return reported here is effectively the CAGR, with income included in the end value.
Can ROI be negative?
Yes. If the final value plus income is less than what you invested, both the total and annualised figures are negative, and the doubling time is not meaningful.
For a pure growth rate between two values, use the CAGR calculator. For projects with cash flows across several years, use NPV and IRR.