ROI and annualised return calculator
Enter what you invested, what it is worth now and how long you held it, and get the return on investment as a percentage, the profit in cash, and the compound annual growth rate that makes returns over different periods comparable. Any income taken along the way — dividends, interest, rent — can be included, and fees can be deducted.
How to use the ROI Calculator
- Enter the amount invested and what the holding is worth now.
- Add any income you took out and any fees you paid.
- Enter the holding period in years — use decimals for part years.
- Press Calculate ROI for the return, the profit and the annualised rate.
The two figures that matter
ROI = (gain ÷ cost) × 100, where the gain is the final value plus any income received, less the original investment and any fees. It tells you the total return over the whole period.
CAGR = ((end ÷ start)1/years − 1) × 100 — the compound annual growth rate — tells you the steady yearly rate that would have produced the same result. It is what makes a three-year return comparable with a ten-year one.
Worked example: £10,000 becomes £18,500 over five years. The profit is £8,500, so the ROI is 85.0%. The CAGR is (18,500 ÷ 10,000)1/5 − 1 = 1.850.2 − 1 = 13.09% a year. Dividing 85% by five to get "17% a year" is the common mistake: it ignores that each year's growth compounds on the last.
Why ROI alone misleads
An 85% return is excellent over five years and poor over twenty. Time is half the information, and ROI omits it entirely — which is why any claim of a percentage return without a period attached should be treated with suspicion. CAGR also smooths: an investment that fell 40% in year one and then trebled has the same CAGR as one that crept up steadily, but the experience and the risk were very different.
Rule of 72
Dividing 72 by the annual percentage rate gives a close estimate of how long money takes to double: at 13.09% a year, 72 ÷ 13.09 ≈ 5.5 years, against an exact 5.6. The approximation is good for rates between about 5% and 20%.
What to include
| Include | Where |
|---|---|
| Purchase price | Initial investment |
| Buying costs, stamp duty, platform fees | Fees and costs — or add them to the initial investment |
| Dividends, interest or rent taken out | Income received |
| Reinvested dividends | Nothing to add — they are already in the final value |
| Selling costs | Fees and costs |
Two cautions. First, these are nominal returns: at 3% inflation, a 13% nominal return is about 9.8% in real terms. Second, the annualised figure assumes the income was received at the end; if large distributions arrived early, a money-weighted return such as IRR describes the result more faithfully. For a portfolio with contributions and withdrawals throughout, neither ROI nor CAGR is the right tool — use IRR or a time-weighted return.
Frequently asked questions
What is the difference between ROI and CAGR?
ROI is the total return over the whole period with no reference to time. CAGR converts that into an equivalent steady annual rate, which is what lets you compare investments held for different lengths of time.
Why can’t I just divide the ROI by the number of years?
Because returns compound. 85% over five years is 13.09% a year compounded, not 17%. Simple division always overstates the annual rate.
Should I include dividends?
Yes, if you took them out — enter them as income received. If they were reinvested they are already reflected in the final value, so do not count them twice.
What is the rule of 72?
A shortcut: 72 divided by the annual percentage return approximates the years needed to double your money. It is accurate enough for rates between roughly 5% and 20%.
Privacy
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Last updated 2026-09-23.