ROI vs annualized return — what's the difference?
Total ROI is the overall percentage gain: (final − initial) ÷ initial. It's simple, but it ignores time — a 50% return is very different over 1 year vs 10.
Annualized return (CAGR) fixes that by showing the smooth yearly rate that would turn your starting amount into the final value. It's the fairest way to compare investments held for different lengths of time.
Putting it in context
A "good" annualized return depends on the risk. Broad stock markets have historically averaged roughly 7–10% per year over the long run. If your number is far above that, make sure you understand the risk you took; if it's below, compare against simply investing in low-cost index funds — see the compound interest calculator.
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Low-cost index funds are how most people capture market returns.
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See what your returns could become with regular investing.
Open calculator →Frequently asked questions
Does this account for extra contributions?
No — this measures a single lump sum from start to finish. For regular monthly investing, use the compound interest calculator.
Is this before or after tax?
It uses the values you enter. For after-tax ROI, enter your net proceeds after any taxes and fees.