Investment Return Calculator 2026: ROI Formula, CAGR and Real-World Examples
Investment return (ROI) = ((Final Value − Initial Investment) ÷ Initial Investment) × 100. Invest $10,000, end at $14,200 → ROI = 42%. For multi-year investments, use CAGR: a $10,000 investment growing to $18,000 over 6 years = 10.3% per year. Use our investment return calculator to run your numbers instantly.
ROI Formula and CAGR: Which to Use?
Two formulas matter for investment returns:
Simple ROI = ((Final Value − Initial Value) ÷ Initial Value) × 100
CAGR = (Final Value ÷ Initial Value)^(1 ÷ Years) − 1
Use simple ROI for single-period comparisons. Use CAGR when comparing investments held over different time periods — it normalises compounding into an annual figure.
| Initial Investment | Final Value | Years | Total ROI | CAGR |
|---|---|---|---|---|
| $10,000 | $12,000 | 2 | 20% | 9.5%/yr |
| $10,000 | $15,000 | 5 | 50% | 8.4%/yr |
| $10,000 | $20,000 | 7 | 100% | 10.4%/yr |
| $10,000 | $25,000 | 10 | 150% | 9.6%/yr |
| $50,000 | $100,000 | 8 | 100% | 9.1%/yr |
Historical Benchmark Returns by Asset Class
| Asset Class | Historical Annual Return | Approximate Current Yield |
|---|---|---|
| S&P 500 (US stocks) | ~10% (100-year avg, before inflation) | Market dependent — check federalreserve.gov |
| 10-Year US Treasury | ~4–5% (recent decade) | Check treasury.gov for current rates |
| High-Yield Savings (HYSA) | Varies with interest rate cycle | Compare current rates at your bank |
| US Real Estate (avg) | ~7–8% total return (historical) | Market and location dependent |
| Gold | ~5–7% long-term avg | Market dependent |
| Investment-Grade Bonds | ~4–6% | Check current corporate bond yields |
Historical return data from public market indices. Past returns do not guarantee future results. Always verify current rates from official sources.
The Rule of 72: Quick Doubling Time Estimate
The Rule of 72 estimates how long it takes to double your money: Years to double = 72 ÷ Annual Return %
| Annual Return | Years to Double | $10K becomes $20K in |
|---|---|---|
| 4% | 18 years | ~18 years |
| 6% | 12 years | ~12 years |
| 8% | 9 years | ~9 years |
| 10% | 7.2 years | ~7 years |
| 12% | 6 years | ~6 years |
Inflation-Adjusted Returns: What Your Money Actually Buys
Nominal returns look great until you subtract inflation. The formula for real return is:
Real return ≈ Nominal return − Inflation rate
If inflation runs at 3% and your investment returns 7%, your real return is approximately 4%. This is why:
- A savings account at 4% with 3% inflation = ~1% real return — barely maintaining purchasing power
- A stock market return of 7% with 3% inflation = ~4% real return — meaningful wealth growth
- A 2% return with 3% inflation = negative real return — losing purchasing power
Always evaluate investments against inflation, not just absolute returns. For current US inflation data, check the Bureau of Labor Statistics CPI tracker.
See also: How much should you save per month? and UK Redundancy Pay Guide.
Investment Return FAQ
How do you calculate investment return?
ROI = ((Final Value − Initial Investment) ÷ Initial Investment) × 100. For multi-year, use CAGR = (Final/Initial)^(1/Years) − 1.
What is a good annual return on investment?
The S&P 500 averages ~10%/year historically (before inflation). A 7%+ real (inflation-adjusted) return is generally considered excellent for a diversified portfolio. Compare any investment return against the current risk-free rate (e.g. Treasury yields) as your baseline.
What is CAGR?
Compound Annual Growth Rate — the annual rate that would produce the same total return if applied consistently each year. Formula: (Final/Initial)^(1/Years) − 1. Use it to compare investments held over different time periods.
How does inflation affect returns?
Real return ≈ Nominal return − Inflation rate. Always calculate real returns to understand true purchasing power growth. Check current US CPI at bls.gov.