Return on Investment (ROI) Calculator - Calculate CAGR & XIRR
Free ROI calculator to calculate investment returns, including CAGR and XIRR. Understand your investment performance with our easy-to-use financial tool
ROI Calculator
Results
How to Use This Calculator
Enter Initial Investment
Enter the amount you initially invested
Enter Final Value
Enter the current or final value of your investment
Select Start Date
Choose when you made the initial investment
Select End Date
Choose when you sold or evaluated the investment
Click Calculate
See your CAGR, XIRR, and total returns
Understanding Investment Returns
Investment returns are crucial for evaluating the performance of your investments. Our calculator provides two key metrics - CAGR and XIRR - to give you a comprehensive view of your investment performance.
What is CAGR (Compound Annual Growth Rate)?
CAGR represents the mean annual growth rate of an investment over a specified period longer than one year. It provides a smoothed annualized growth rate.
What is XIRR (Extended Internal Rate of Return)?
XIRR calculates the annualized return for cash flows that occur at irregular intervals, making it more accurate for real-world investment scenarios.
Why Use Both CAGR and XIRR?
While CAGR provides a simple average annual return, XIRR offers a more precise calculation that considers the timing of cash flows.
For a dedicated CAGR calculation, explore our CAGR Calculator to understand compound annual growth rates in detail.
If you need to calculate XIRR for more complex cash flows, our XIRR Calculator provides accurate annualized returns.
To see how compound interest affects your investments over time, try our Compound Interest Calculator.
Understanding Your Results
The results from this calculator help you evaluate the performance of your investments and make informed decisions about future investment opportunities.
Interpreting CAGR
CAGR shows the steady rate at which your investment would have grown if it had compounded at the same rate each year.
Interpreting XIRR
XIRR provides a more accurate measure of your investment's performance by accounting for the timing of cash flows.
Using Return Metrics
Compare your CAGR and XIRR to relevant benchmarks to assess performance and make informed investment decisions.
Important Considerations and Limitations
While this calculator provides valuable insights into investment performance, it's important to understand its limitations.
1. Risk Not Accounted For
This calculator focuses on returns but doesn't measure risk. High returns often come with higher volatility.
2. Doesn't Include Costs
Transaction costs, management fees, and taxes can significantly impact your actual returns.
3. Past Performance
Historical returns don't predict future performance. Market conditions change over time.
4. Inflation Impact
The calculator doesn't account for inflation, which can erode the purchasing power of your returns.
Real-World ROI Examples
📈 Stock Investment
Investment: $5,000 in Apple stock
Holding Period: 3 years (Jan 2022 - Jan 2025)
Sale Price: $8,200
ROI: 64% | CAGR: 17.8%
🏠 Real Estate Investment
Investment: $50,000 down payment on $250,000 rental
Period: 5 years | Annual rental income: $15,000
Property appreciation: $75,000
ROI: 180% | CAGR: 18.9%
💼 Business Investment
Initial Investment: $10,000 in startup
Investment Period: 7 years
Exit Valuation: $85,000
ROI: 750% | CAGR: 36.2%
ROI by Investment Type
Stock Market
Average Annual ROI: 7-10%
Tech stocks: 10-15% | Dividend stocks: 4-6%
Real Estate
Residential: 8-12% annual ROI
Commercial: 6-15% | REITs: 6-10%
Bonds & Fixed Income
Government Bonds: 2-4% | Corp Bonds: 3-6%
High-yield: 5-8% ROI annually
Business Ventures
Startups: 25-50%+ potential ROI
Small business: 10-30% annual ROI
💡 Pro Tips for Maximizing ROI
Diversify investments: Spread capital across multiple investments to reduce risk and stabilize overall ROI.
Use compound returns: Reinvest dividends and gains to achieve exponential growth (compounding effect).
Monitor regularly: Track investments quarterly to ensure they meet ROI expectations. Rebalance if needed.
Account for costs: Remember ROI calculations should subtract taxes, fees, and inflation for true returns.
Frequently Asked Questions (FAQ)
Q: What is ROI and why is it important for investors?
A: ROI (Return on Investment) measures the gain or loss generated on an investment relative to the amount invested. It helps investors evaluate efficiency and compare different investments.
Q: What is the difference between CAGR and XIRR?
A: CAGR measures mean annual growth assuming constant growth rate. XIRR calculates annualized return for irregular cash flows, making it more accurate for real-world investments.
Q: How can I use CAGR and XIRR to evaluate performance?
A: CAGR helps understand average annual growth over time. XIRR provides accuracy when you have multiple investments or withdrawals at different times.
Q: What constitutes a good ROI for investments?
A: A good ROI depends on investment type and risk level. For stock market investments, 7-10% annually is considered good historically. Always compare to relevant benchmarks.
Q: What are the limitations of ROI, CAGR, and XIRR?
A: They don't account for risk, volatility, inflation, transaction costs, or taxes. Past performance doesn't guarantee future results. Use alongside other financial indicators.
Q: How accurate are these calculations?
A: The calculations are mathematically accurate for the given inputs, but actual investment performance may vary due to market conditions and other factors.