ROI Calculator
Calculate return on investment (ROI) and annualised return (CAGR). Enter initial investment and final value to see your returns
Calculate ROI from Final Value
Total ROI
25.00%
Annualised Return
11.80%
Compare with Other Rates
| Annual Rate | Final Value | vs Your Rate |
|---|---|---|
| 1% | £10,201 | £-2,299 |
| 2% | £10,404 | £-2,096 |
| 3% | £10,609 | £-1,891 |
| 4% | £10,816 | £-1,684 |
| 5% | £11,025 | £-1,475 |
| 6% | £11,236 | £-1,264 |
| 7% | £11,449 | £-1,051 |
| 8% | £11,664 | £-836 |
Total ROI vs Annualised Return: The Difference Matters
Total ROI tells you the headline gain. A £10,000 investment that grew to £12,500 has 25% total ROI. That sounds good until you ask over what period. Earned in one year it is excellent; spread over five years it is a 4.6% annualised return, barely matching a cash ISA in 2026 and lagging inflation. The annualised figure (CAGR, compound annual growth rate) is the only honest way to compare investments of different durations.
The formula behind annualised return is (final divided by initial)^(1 divided by years) minus 1, multiplied by 100. The calculator runs it both ways: enter a final value to see total and annualised ROI, or enter an annual return rate to project where you end up after a given period. Always lead with the annualised figure when comparing options because it strips out the time variable that makes raw ROI numbers meaningless.
Annualised Return Examples (£10,000 Initial)
| Final Value | Years | Total ROI | Annualised |
|---|---|---|---|
| £10,500 | 1 | 5% | 5.0% |
| £12,500 | 5 | 25% | 4.56% |
| £15,000 | 5 | 50% | 8.45% |
| £20,000 | 10 | 100% | 7.18% |
| £25,000 | 10 | 150% | 9.60% |
| £30,000 | 20 | 200% | 5.65% |
Benchmarks: When ROI Is Actually Good
Use these reference points when judging an annualised return. Cash ISA rates in 2026 sit around 4 to 5%, which is the floor; below this you should be holding cash. UK Premium Bonds average around 4.4% but with random distribution. Long-run global stock market returns (FTSE All-World, S&P 500) average roughly 7 to 9% annualised after inflation, with significant short-term volatility. UK residential property has averaged about 5 to 6% annualised over 30 years, before transaction costs.
Anything pitched at over 15% annualised should trigger immediate scepticism. Either it is short-term and unsustainable, comes with significant risk that has not been disclosed, or is a scam. Genuine 'good' returns sit in the 6 to 12% annualised range over 5+ year holding periods. Use the [compound-interest-calculator](/compound-interest-calculator) to see how those modest-looking percentages compound into substantial sums over decades.
What ROI Misses: Costs, Tax and Inflation
A 7% headline return becomes a 4 to 5% real return after a typical UK 2 to 3% inflation rate. If the gain is in a taxable account rather than an ISA, capital gains tax at 18 or 24% takes another bite. Investment platform fees of 0.25% to 1% per year compound over time and quietly eat 10 to 25% of your final pot over a 30-year period.
The honest comparison is real, post-tax, post-fee return. A £10,000 investment growing 7% per year for 20 years reaches roughly £38,700 nominally, but only about £21,600 in 2026 spending power after 3% inflation, and less again after fees and tax. This is not a reason to avoid investing; it is a reason to use ISAs, low-cost trackers, and time horizons measured in decades rather than years.
Frequently Asked Questions
What is a good annual ROI?
Across diversified equity investments held for 10+ years, 7 to 9% annualised is typical and historically achievable through a global tracker fund. UK residential property averages 5 to 6% annualised before costs. Cash ISAs offer 4 to 5% in 2026. Anything claiming 'guaranteed' returns above 6% should be treated with significant scepticism, as genuine returns of that level always carry meaningful risk.
How is annualised return different from average return?
Average return adds the annual returns and divides by years. Annualised (CAGR) compounds them. If you gain 50% in year one and lose 50% in year two, your average return is 0% but your CAGR is negative because £10,000 becomes £15,000 then £7,500. CAGR always reflects what actually happened to your money; arithmetic averages can flatter volatile investments and should be ignored.
Should I use ROI or IRR for evaluating projects?
ROI is fine for simple buy-and-hold investments where the only cash flows are the initial outlay and a final sale. For projects with multiple cash inflows and outflows over time (such as a rental property with mortgage payments, or a business with ongoing costs and revenue), use Internal Rate of Return (IRR) instead. IRR handles the timing of every cash flow; ROI just looks at the start and end points.
Does the calculator account for inflation?
No, it shows nominal returns. To see real (inflation-adjusted) returns, subtract approximately 2 to 3% from the annualised figure for typical UK inflation. A 7% nominal return is roughly 4 to 5% real. For longer-term planning, the real figure matters more because it tells you what your money will actually buy in the future, not what the bank statement says.
How long should I hold an investment to expect average returns?
Long-run equity averages of 7 to 9% require 10+ year holding periods to reliably show up. Over 1 year, equity returns can range from negative 30% to positive 30%; over 20 years, the historical range narrows substantially and very few rolling 20-year periods have produced negative real returns. Time in the market is the single biggest factor in achieving the headline figures.
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