Investment ROI: Comparing Total ROI with an Annualized Return
A return accumulated over several years should not be described as a one-year result. Compare total ROI with annualized growth before judging investments held for different periods.
Use the Investment ROI Calculator to enter your own figures and compare the result with the worked example below.
Investment ROI formula
ROI = (final value + income − fees − initial investment) / initial investment × 100%. Annualized return = ((final value + income − fees)/initial investment)^(1/years) − 1. Income and fees are treated as terminal cash flows.
Worked example
A $1,000 investment ending at $1,210 after two years with no income or fees has 21% total ROI and 10% annualized return.
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
This calculation treats income and fees as ending cash flows. For deposits or distributions at different dates, a dated cash-flow return method is more appropriate.
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Method and further reading
The example follows the FinMathly calculator method. For broader background, see Investor.gov: Introduction to investing. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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