ROI Percentage Calculator
100% over five years is 14.87% a year, not 20%.
100% over five years is 14.87% a year, not 20%. Return on investment in total and annualised, with the doubling time at that rate.
Total return on investment
100%
14.87% a year compounded over 5 years
Dividing total return by the number of years overstates the annual rate, because returns compound. A 100% return over 5 years is 14.87% a year, not 20% — and the gap widens with both the return and the period. The compound annual growth rate is the figure to compare between investments of different lengths.
How the ROI Percentage Calculator works
Return on investment in total and annualised, with the doubling time at that rate. Dividing total return by years overstates the annual rate, because returns compound, which is what the annualised figure corrects.
Also known as: return on investment calculator · annualised return calculator · cagr calculator · compound annual growth rate
Why total divided by years overstates the rate
Returns compound, so an annual rate applied repeatedly produces more than the rate times the years. Doubling over five years is 14.87% a year, not 20%, because 1.1487 to the fifth power is 2.
The gap widens with both the return and the period. A tenfold return over twenty years is 12.2% a year, against the 45% that a simple division would suggest. The simple version is not an approximation; it is wrong.
The compound annual growth rate is the figure that makes investments of different lengths comparable, which is exactly what a raw ROI cannot do. It is the annual rate that would have produced the observed total.
What ROI leaves out
Risk, entirely. A 15% return from a savings account and a 15% return from a speculative bet are identical by this measure, and they are not remotely the same investment.
The timing of cash flows, too. Money invested and returned in instalments is not captured by a single before-and-after ratio, which is what internal rate of return exists to handle.
And inflation. A nominal 6% during 4% inflation is a real return of about 1.9% — divided rather than subtracted, for the same reason as everywhere else. Long-horizon comparisons only make sense in real terms.
The rule of 72 and doubling time
Divide 72 by the annual percentage rate to get the approximate doubling time. At 8% that gives nine years, against the exact 9.006 — accurate enough for mental arithmetic across the useful range.
It works because the logarithm of 2 is about 0.693, and 69.3 divided by the rate gives the exact answer for continuous compounding. Seventy-two is used instead because it divides so conveniently.
The same rule runs backwards for inflation. At 3% inflation prices double in about 24 years, which is a more concrete way to feel a percentage than the percentage itself.
Where to go next
The ROI Percentage question rarely arrives on its own. These are the ones that usually come with it:
- Markup Calculator — A 50% markup is a 33.3% margin.
- Discount Percentage Calculator — 20% then 10% is 28% off, not 30%.
- Loan & EMI Calculator — Monthly payment, total interest, and a full amortization schedule.
- Mortgage Calculator — Full monthly cost including tax, insurance, and PMI.
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
How do I calculate return on investment?
Net return divided by the amount invested, times 100. Turning 10,000 into 20,000 is a 100% ROI.
What is the difference between ROI and annualised return?
ROI ignores time entirely. Annualised return (the compound annual growth rate) expresses it as a per-year rate, which is the only way to compare investments of different lengths.
Why isn't 100% over five years 20% a year?
Because returns compound. It is 14.87% a year, since 1.1487 to the fifth power is 2. Dividing by years always overstates the rate, and the gap widens with both the return and the period.
What is CAGR?
Compound annual growth rate — the constant annual rate that would produce the observed total. It is the annualised figure, and it is what makes returns comparable.
Does ROI account for risk?
No, which is its main limitation. A 15% return from a savings account and a 15% return from a speculative bet are not equivalent, and ROI cannot distinguish them.
What is the rule of 72?
Divide 72 by the annual rate to get the approximate doubling time. At 8% a year that is nine years, which is close to the exact 9.006.
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