Investment Return (ROI) Calculator

ROI and CAGR, side by side

Return on Investment (ROI) tells you how much you made on an investment; Compound Annual Growth Rate (CAGR) tells you how fast it grew per year. Both are useful — often at the same time.

Formulas

• ROI = (Final Value − Initial Value) / Initial Value × 100
• CAGR = (Final Value / Initial Value)^(1 / Years) − 1, as a percentage

Worked example

Bought a stock at ₹100, sold at ₹180 five years later:

• Profit: ₹80
• ROI: (180 − 100) / 100 × 100 = 80%
• CAGR: (180 / 100)^(1/5) − 1 = 12.47%

The 80% ROI sounds impressive. The 12.47% CAGR shows it for what it is — a respectable-but-not-extraordinary annual return.

Why CAGR is the better comparator

Compare two investments:

• A: invested ₹100, sold at ₹140 after 2 years. ROI = 40%, CAGR = 18.32%.
• B: invested ₹100, sold at ₹250 after 10 years. ROI = 150%, CAGR = 9.60%.

Investment B has a higher total return but a lower compounded growth rate. In CAGR terms, A was the better allocation of capital — though B compounded for longer, producing more absolute wealth.

Limitations

• Lumpy cash flows (additional contributions, partial redemptions, dividends reinvested) require IRR, not CAGR.
• Inflation is ignored — this shows nominal returns. For real returns, subtract the inflation rate from CAGR.
• Taxes are ignored — the calculator shows pre-tax returns.

Use CAGR to rank investments; use ROI to describe the total outcome.