ROI Calculator
Find out how well your investment performed. Enter what you paid, what it's worth now, and how long you held it — get your total ROI, annualized return (CAGR), and asset multiplier instantly.
Return on Investment (ROI) is a fundamental metric that measures the gain or loss on an investment relative to its cost. The formula is straightforward: ROI = (Final Value − Initial Investment) / Initial Investment × 100. A 50% ROI means you earned 50 cents for every dollar invested, regardless of how long the investment was held.
While simple ROI is easy to calculate, it ignores the time dimension. CAGR (Compound Annual Growth Rate) solves this by expressing the equivalent annual return needed to reach the final value from the initial investment over the holding period. A 100% ROI over 2 years represents a 41.4% CAGR, while the same 100% ROI over 10 years is only a 7.2% CAGR — a critical distinction when comparing investments held for different durations.
The asset multiplier (or 'multiple on invested capital') shows how many times your initial investment grew. A 3× multiplier means your investment tripled. This metric is widely used by venture capitalists and real estate investors because it provides intuitive context for large, long-term investments where percentage returns can be misleadingly large or small.
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Frequently Asked Questions
- What is ROI?
- ROI (Return on Investment) measures the gain or loss on an investment relative to its cost. Simple ROI = (Final Value − Initial Investment) / Initial Investment × 100. A 50% ROI means you earned 50 cents for every dollar invested.
- What is the difference between ROI and CAGR?
- Simple ROI ignores time — a 100% gain over 2 years and a 100% gain over 20 years look the same. CAGR (Compound Annual Growth Rate) normalizes for time, expressing the equivalent annual return needed to reach the final value. CAGR is the right metric when comparing investments held for different durations.
- What does the asset multiplier mean?
- The multiplier shows how many times your initial investment grew. A 3× multiplier means your investment tripled. Venture capitalists and real estate investors often talk in multiples (e.g., "2× return") rather than percentages because it's intuitive for large, long-term investments.