Calculate return on investment, annualized CAGR, and net profit for stocks, real estate, 401(k), rental properties, or any investment. Compare against S&P 500 benchmarks.
ROI vs CAGR: Which Number Actually Matters
ROI tells you the total percentage gain or loss on an investment. CAGR tells you what that works out to per year — which is what you actually need to compare investments that ran for different time periods.
A 100% ROI over 10 years sounds great. That’s only 7.2% CAGR — roughly matching a basic S&P 500 index fund. The same 100% ROI in 3 years? That’s 26% CAGR, genuinely exceptional.
US benchmark returns to compare against
Benchmark
10-year average
20-year average
S&P 500 (total return)
~13%
~10%
Nasdaq-100
~17%
~13%
US aggregate bonds
~2%
~4%
Residential real estate
~5%–8%
~5%–7%
T-bills (risk-free)
~2.5%
~2.5%
Sources: Morningstar, NAREIT, Federal Reserve (figures vary by start/end date).
The fee drag no one talks about
A 1% annual fee on $200,000 invested at 7% for 30 years costs you $182,000 in lost compound growth. Vanguard’s total stock market index fund (VTSAX) charges 0.04%. That 0.96% difference is enormous over decades. Before paying an AUM fee, be clear on exactly what you’re getting for it beyond portfolio management.
Real estate ROI: don’t forget depreciation
The IRS lets you depreciate residential rental property over 27.5 years. On a $300,000 property (land excluded), that’s roughly $9,000/year in depreciation you can deduct against rental income — a real tax benefit that doesn’t show up in simple ROI math. Factor it into your after-tax return calculation.
Frequently Asked Questions
Total ROI = (Current Value + Dividends Received − $10,000) / $10,000 × 100. If Apple is now worth $22,000 and you received $400 in dividends, your ROI = ($22,400 − $10,000) / $10,000 = 124%. Your annualized CAGR = ($22,400/$10,000)^(1/5) − 1 = 17.5% per year. Plug those numbers into the calculator above — the CAGR is what matters most for comparing against the S&P 500's ~14% average over the same period.
The S&P 500 has returned roughly 10.5% annually before inflation and 7.5% inflation-adjusted over the past 50 years. But there's huge variance by decade — the 2010s averaged about 13.6% per year, the 2000s averaged about -1% per year (the lost decade). Nobody knows what the next decade brings. Most fee-only financial planners use 6%–7% real return for retirement projections — conservative enough to plan around, optimistic enough to reflect historical evidence.
Two numbers matter most: cash-on-cash return and cap rate. Cash-on-cash = annual cash flow ÷ total cash invested. If you put $80,000 down on a property, pay $1,200/month PITI, and collect $2,000/month in rent, your annual cash flow is roughly $9,600 (ignoring repairs/vacancy) — that's a 12% cash-on-cash return, solid. Cap rate = net operating income ÷ purchase price (ignoring financing). Target 5%–8% in most US markets. Anything below 4% and you're banking almost entirely on appreciation.
Your 40% total gain over 3 years is a CAGR of about 11.9% per year — not 13.3% (which is just 40÷3). CAGR accounts for compounding; the arithmetic average doesn't. Use the calculator above, set mode to Annualized, enter your start value and end value, and you'll get the exact CAGR instantly. Then compare it to the S&P 500 CAGR over the same period to see if you actually beat the market.
The math is pretty brutal. On $500,000 at 7% growth, a 1% AUM fee over 20 years costs you roughly $350,000 in lost compound growth — the fee on the fee on the fee. A three-fund portfolio of Vanguard or Fidelity index funds (total US market, international, bonds) has expense ratios of 0.03%–0.05% and historically beats most actively managed funds over 10+ years. Model your investment growth with our [Compound Interest Calculator](/calculators/compound-interest-calculator/). The fee is worth it if your advisor keeps you from panic-selling in downturns, does comprehensive tax planning, or manages real complexity (estate planning, business interests, RSUs). Pure portfolio management? Hard to justify 1% annually.
Flipping ROI = (Sale Price − Purchase Price − Renovation Costs − Holding Costs − Selling Costs) / Total Cash Invested × 100. Holding costs include mortgage/carrying costs, property taxes, insurance, and utilities during renovation. Selling costs include realtor commissions (typically 5%–6%) and closing costs (1%–2%). A common rookie mistake is forgetting that 6 months of holding costs and a 6% realtor commission can eat $30,000+ on a $300,000 flip. Factor everything in before you buy.
