ROI Calculator
Calculate Return on Investment (ROI) and annualised CAGR. Compare investment performance instantly.
ROI Calculator
ROI Explained in Plain English
Return on Investment measures how much you gained (or lost) relative to what you put in. If you invested £10,000 and got back £13,000, your ROI is 30%. Simple as that.
The formula: ROI = ((Final Value - Initial Cost) / Initial Cost) x 100. But raw ROI has a blind spot — it ignores time. A 30% return in 1 year is excellent. A 30% return over 10 years is mediocre. That's why CAGR (Compound Annual Growth Rate) exists.
CAGR smooths your return into an equivalent annual rate, letting you compare investments of different durations on equal terms. A 30% total return over 3 years is roughly 9.1% CAGR. Over 10 years, it's only 2.7% CAGR.
Investment Return Benchmarks
| Investment Type | Typical Annual Return | Risk Level | Notes |
|---|---|---|---|
| Cash savings (UK) | 4–5% | Very low | FSCS protected up to £85,000 |
| UK government bonds | 3–5% | Low | Gilts; rate varies with base rate |
| FTSE 100 (UK stocks) | 7–10% | Medium-high | Long-run average including dividends |
| S&P 500 (US stocks) | 8–12% | Medium-high | ~10% average since 1926 |
| UK property | 5–8% | Medium | Capital growth + rental yield combined |
| Global index fund | 7–10% | Medium | Diversified; lower volatility than single market |
What this means for you: These are long-run averages. Individual years vary wildly — the S&P 500 has had years of +30% and years of -37%. Past returns don't guarantee future performance. But they give you a benchmark: if someone promises consistent 20%+ annual returns with "low risk," be very sceptical.
The Power of Compounding
| £10,000 Invested at | After 5 Years | After 10 Years | After 20 Years |
|---|---|---|---|
| 3% per year | £11,593 | £13,439 | £18,061 |
| 5% per year | £12,763 | £16,289 | £26,533 |
| 8% per year | £14,693 | £21,589 | £46,610 |
| 10% per year | £16,105 | £25,937 | £67,275 |
What this means for you: Time is the most powerful variable in investing. At 8% annual return, your money doubles roughly every 9 years (the Rule of 72: divide 72 by the annual return to estimate doubling time). Starting 5 years earlier matters more than picking a slightly better fund.
Common ROI Mistakes
Ignoring Inflation
A 5% return when inflation is 4% gives you only 1% real growth. Always think in real (inflation-adjusted) terms. Nominal returns look better but don't reflect actual purchasing power.
Forgetting Fees and Tax
A fund returning 8% with 1.5% annual fees actually gives you 6.5%. Over 20 years, that 1.5% fee eats roughly a third of your total gains. ISA wrappers shelter returns from UK capital gains tax.
Cherry-Picking Timeframes
You can make almost any investment look good or bad by choosing the right start and end dates. Always look at returns over multiple full market cycles (10+ years) for a fair picture.
Confusing ROI with Profit
A 200% ROI sounds incredible, but if you only invested £50, that's £100 profit. The percentage matters less than the absolute amount and the time it took. Context is everything.
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How to use this tool
Enter the amount invested
Enter the amount returned
Optionally enter the investment period in years
Common uses
- Comparing returns across different investments
- Calculating annualised returns for long-term holdings
- Evaluating property investment performance
- Assessing business investment decisions
- Benchmarking portfolio returns against market averages
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