Calculate the return on any investment — total gain or loss, ROI percentage, annualized return, and how inflation affects your real return.
ROI (Return on Investment) measures the total gain or loss relative to what you invested. CAGR (Compound Annual Growth Rate) is the annualized return — the single rate at which the investment would have grown smoothly year over year.
A "good" ROI depends on the investment type and timeframe. The US stock market averages about 10% annually before inflation. Real estate has historically returned 4–8% annually. A savings account at 4–5% APY is a good low-risk return. Anything over 10% annualized over a long period is exceptional and often indicates higher risk.
ROI is the total return — how much you made in total. CAGR is the annualized rate — the consistent yearly return that would produce the same total. A 50% ROI over 5 years equals a CAGR of about 8.4%. CAGR is better for comparing investments held for different time periods.
Nominal return is the stated percentage gain. Real return adjusts for inflation — it shows how much your purchasing power actually grew. If your investment returned 7% but inflation was 3%, your real return was about 3.88%. This distinction matters most for long-term planning, where inflation erodes purchasing power significantly.