ROI vs annualised ROI?
ROI is total return; annualised ROI (CAGR) is the yearly compound rate. Always compare investments by annualised, not raw ROI.
Calculate total ROI, annualized returns, and net profit on any investment. Compare stocks, real estate, and business investments side by side.
ROI = (Final Value − Initial Investment) / Initial Investment × 100. Annualised ROI = (Final/Initial)^(1/years) − 1.
A $10,000 investment worth $15,000 after 3 years has ROI = 50%, but annualised return = (1.5)^(1/3) − 1 ≈ 14.5% per year.
ROI is total return; annualised ROI (CAGR) is the yearly compound rate. Always compare investments by annualised, not raw ROI.
It should — use 'total return' = (Final + dividends received) / Initial − 1. Ignoring dividends understates S&P 500 returns by ~2%/year.
Above the S&P 500's ~10% annualised is 'beating the market'. Real estate targets 8–12% annualised including appreciation and cash flow.