Return on investment.
These calculators use standard financial formulas (amortization, compound interest, marginal tax brackets) to estimate results based on the numbers you enter. They don't account for your full financial picture, and results shouldn't be treated as financial, tax, or investment advice. For decisions with real money on the line, check the numbers with a lender, accountant, or financial advisor who can see your complete situation.
ROI (return on investment) is a single percentage: (Final Value − Initial Cost) / Initial Cost.
It doesn't account for time — a 50% return in 1 year is very different from 50% in 10 years — so pair with CAGR for longer holdings.
ROI is a simple, unitless percentage, which makes it easy to compare very different kinds of investments — a rental property, a stock, or a small business — on the same scale, as long as you're consistent about what counts as cost and what counts as final value.
$1,000 investment now worth $1,500: ROI = ($1,500 − $1,000) / $1,000 = 50.00%.
Depends on time and risk. Stock market averages ~10%/year long-term; short-term projects vary. Compare to risk-free rate and alternatives.
ROI is total percent gain. CAGR is annualized — the equivalent yearly return producing the same result.
For a realistic picture, yes — subtract transaction fees, management fees, and any capital gains tax from the final value before calculating. Otherwise ROI overstates what you actually keep.