Simple return, and the same return a yearMethod checked 11 September 2026

ROI calculator

An estimate for information only, not investment or tax advice. How this is worked out

Return on investment 80.00% Full breakdown

What the investment returned

Return on investment 80.00% over 5 years

That is 11.8135% a year, or 12.4746% once a year compounded annually.

Gain: $8,000
Invested: $10,000
Came to: $18,000

The plain return says nothing about how long the money was tied up, which is why the annualised figure sits beside it. Two investments with the same return are not the same investment if one took a year and the other took ten.

A return without a time attached is half an answer

Return on investment is the simplest measure in finance: what you got back, less what you put in, over what you put in. It is also the most quoted measure without the one piece of context that makes it mean anything. The same return is excellent over a year and mediocre over a decade, and the difference is not a detail.

That is why this page prints two figures. The plain return is what most people mean by ROI and what most sources quote. The annualised figure underneath it is the rate at which the money would have had to grow, every year, to get from the first amount to the second in the time it actually took. Comparing two investments means comparing the second figure.

Nominal a year, and effective a year

The annualised return appears twice, in two conventions, because both are in common use and they are not the same number. The first is a nominal annual rate on a monthly grid: the monthly rate multiplied by twelve, which is how a lender or a bond desk quotes. The second is the effective annual rate: what the same growth comes to when it is compounded once a year, which is how a savings account has to be advertised in most places.

The effective figure is always the larger of the two when the return is positive, because compounding within the year is being counted. Neither is wrong and neither is a rounding of the other. Quoting one where the other is expected is how two honest sources end up disagreeing about the same investment.

What the calculation leaves out

It takes two amounts and a length of time, so anything that happened in between has to be folded into one of them. Dividends, rent, coupons and any other income count as part of what came back, on the assumption that they arrived at the end; if they arrived early and were reinvested, the true return is higher than this page reports. Money added part way through is not something two amounts can express at all, and the IRR page is the one that takes a stream of dates and amounts.

Tax, dealing fees and inflation are all absent. A return after tax and after inflation is a different and usually much smaller number, and turning this page's answer into that one needs figures this page never asks for.

Common questions

What counts as the amount invested?

Everything that left your hands to acquire the thing, including the costs of buying it. Leaving fees out flatters the return, and the flattery grows the shorter the holding period is.

Why is the annualised return so much lower than the plain one?

Because compounding runs the other way when you unwind it. Doubling your money sounds like a hundred per cent, and over ten years the growth rate that gets you there is nothing like that. This is the single most common misreading of a quoted return, and it is the reason this page shows the two side by side rather than making you look one of them up.

Can the annualised return be negative?

Yes, and it is shown as a negative rate whenever less came back than went in. The search that finds it covers rates well below zero, and stops at minus ninety per cent a year: below that an investment is all but gone and a figure to four decimal places would be false precision.

Why is it the same solver as the IRR page?

Because it is the same question with two cash flows instead of a dozen. Money out today, money in later, and the rate that makes them balance. Writing a second method for the two-flow case would have been a second thing to keep correct, and it would eventually have disagreed with the first.

Is anything I type stored?

No. The calculation happens on the server as part of rendering the page, nothing is written down, and the access log for this site drops the query string precisely so that the numbers you enter are never recorded.

Sources

No figure on this page is read from a table, so there is nothing to source. What these documents define is the convention behind the arithmetic, and the regulated measures this calculator deliberately does not compute:

How this is worked out

The figures are arithmetic on the numbers you type, and nothing here is a forecast of what an investment will actually do.

Money is held in whole cents and every step is integer arithmetic, so the same inputs always give the same answer. A period is discounted in one division, with the annual rate divided by the number of periods in a year inside the same expression, and the result rounded to the nearest cent. That means the answer is a cent or two away from the textbook formula, which lets interest run to fractions of a cent forever. The table on the page is the calculation itself rather than a second pass over it, so the rows and the headline can never disagree.

The annualised figure is the rate at which the amount invested grows into the amount returned over the months you gave, found by the same search the IRR page uses on a stream with two entries in it. There is no fractional power anywhere, which is what keeps the answer identical on every run.