ROI measures total profit
It compares total gain with all invested capital, but says nothing about how long the investment took.
Investment Return Calculator
Measure investment performance from multiple angles while avoiding common confusion between ROI and CAGR.
Investment details
Include cash added, cash withdrawn and distributions to estimate your total return.
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Total return on invested capital41.67%ROI
Net profit$5,000
Annualized ROI—
CAGR—
Holding period1,096 days (3 years)
Total invested capital$12,000
Ending value$16,500
Withdrawals + Dividends & income received$500
Annualized ROI and CAGR are not shown because this calculation includes interim cash flows. Their exact dates are required for an accurate money-weighted return (XIRR).
Educational estimate only. Taxes and the timing of cash flows are not included.
How is ROI calculated?
ROI compares net profit with total invested capital. Withdrawals and distributions count as proceeds, while additional contributions increase invested capital.
ROI = (Ending value + withdrawals + income − invested capital) / invested capital × 100%
When should you use CAGR?
CAGR is useful for comparing growth rates across different holding periods when there are no interim cash flows. For recurring deposits or withdrawals, XIRR is more appropriate.
CAGR = (Ending value / Starting value)^(1 / years) − 1
Frequently asked questions
How is ROI different from CAGR?
ROI measures total return over the entire holding period. CAGR expresses a smoothed annual growth rate.
Should dividends be included?
Yes. If distributions are not already included in the ending value, add them as dividends and income received.
Why is CAGR hidden when I add contributions?
CAGR cannot correctly account for cash flows at different times. Dated cash flows and XIRR are needed instead.
Use the right return for the question
ROI, annualized ROI, CAGR and money-weighted return answer different questions. This calculator only displays a time-adjusted result when the available inputs can support it.
Dates beat rounded years
The holding period uses exact calendar days and a 365.2425-day year before annualizing.
CAGR needs clean endpoints
CAGR is valid for a starting value and ending value with no money added, removed or distributed in between.
Cash-flow timing changes the answer
With interim flows, exact dates are needed for XIRR. Hiding an unsupported annualized number is more accurate than guessing.
Step-by-step example
Worked example: ROI versus CAGR
An investment grows from $10,000 to $14,000 in exactly three years with no interim cash flows.
- Net profit is $4,000.
- ROI is $4,000 ÷ $10,000 = 40%.
- CAGR is (14,000 ÷ 10,000)^(1/3) − 1 ≈ 11.87% per year.
- Adding $2,000 midway would make that CAGR invalid without the contribution date.
Takeaway: Use ROI to describe the whole deal; use CAGR to compare clean start-to-finish growth across different durations.
Starting value100%
Ending value140%
Total ROI40%
Annual CAGR11.87%
What should you enter for a better result?
| Field | What to enter | Why it matters |
|---|---|---|
| Starting / ending value | Use market value at the exact measurement dates. | Defines the endpoints of performance. |
| Contributions | Include capital added after the start date. | Raises invested capital, not profit. |
| Withdrawals and income | Include cash taken out only if it is no longer in ending value. | Prevents understating total proceeds. |
| Dates | Use actual trade/valuation dates rather than a rounded number of years. | Improves annualization accuracy. |
Cross-checked against major and official sources
These references were used to cross-check input design, formulas, model limits or current rules. Links open in a new tab so you can verify the methodology yourself.
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