ROI - Return on Investment Calculator
See what you gained or lost, and what that works out to per year.
Details
= 36 months
Investment gain
+$5,000
$10,000 grew to $15,000
ROI
50%
Annualized ROI
14.47%
This projects what an investment grows to from a starting amount, regular contributions, a return and a time period.
It separates what you paid in from what the market added, which is the split that tells you what is actually driving the result.
How investments grow over time
An investment projection compounds two things at once: a lump sum you already have, and whatever you add along the way. Both grow, but they grow very differently.
The lump sum compounds for the whole period. Each new contribution only compounds for the time remaining after it arrives, so the last year's contributions barely grow at all.
The useful number is the split. $10,000 plus $500 a month at 7% for 20 years reaches $300,851, and $170,851 of that is growth rather than money you paid in. More than half the result was never contributed.
The original $10,000 alone becomes $40,387, because it had the full twenty years. The final year's contributions add almost nothing beyond themselves.
What to enter
- Initial investment
- What you start with. It compounds for the entire period, so it works harder than any later contribution.
- Regular contribution
- What you add each month or year. Consistency matters more than size, because each contribution needs time.
- Expected return
- 7% is a common long-run planning figure for a diversified stock portfolio. Use less for a bond-heavy one.
- Time period
- The most powerful input. Growth is exponential, so the later years contribute far more than the early ones.
- Fees
- Deduct them from the return. A fund charging 1% a year turns a 7% return into 6%, and over decades that costs a great deal.
What this assumes
A steady annual return. Real markets deliver averages made up of very good and very bad years, and the order matters if you need the money on a date.
Tax is not modelled. A taxable account loses some return to tax on dividends and gains along the way; a Roth or IRA does not.
How to calculate investment growth
Compound the starting amount, compound the contributions, and add the two together.
- P
- Initial investment
- PMT
- Contribution per period
- r
- Return per period, so an annual rate divided by 12 for monthly
- n
- Number of periods
Match the rate to the period. Monthly contributions need a monthly rate and a count in months. Mixing an annual rate with monthly periods is the most common error here.
Compound the starting amount. It grows for the entire term, which is why an early lump sum is so valuable.
Add the future value of the contributions. Each one compounds only for the periods remaining after it is paid in.
Subtract fees from the return before you start. A 7% return with a 1% fund fee is a 6% projection. Fees are the one input you can genuinely control.
See a worked example: how much of the result you never paid in
- Start
- $10,000
- Contribution
- $500 a month
- Period
- 20 years at 7%
Contributions: $10,000 + ($500 × 240) = $130,000.
Final balance: $300,851.
Growth: $170,851, which is 57% of the total.
The original $10,000 alone grew to $40,387, quadrupling because it had the full twenty years.
$300,851, of which $170,851 is growth
Frequently asked questions
- What return should I use?
7% is a common long-run planning figure for a diversified stock portfolio, and around 5% for a balanced mix with bonds. Cash and CDs are lower again.
Whatever you pick, subtract fees. A projection at 7% that ignores a 1% expense ratio is really a 6% projection, and the difference over twenty years is substantial.
- Is it better to invest a lump sum or spread it out?
Mathematically, a lump sum usually wins, because the money is in the market longer and markets rise more often than they fall.
Spreading it out (dollar-cost averaging) reduces the risk of investing everything just before a fall, which is a real behavioural benefit. If a bad first year would make you sell, spreading it is the better choice for you.
- How much do fees actually cost?
More than the percentage suggests, because the fee is charged on the whole balance every year, including the growth.
The difference between a 0.05% index fund and a 1% actively managed one is nearly a full percentage point of return, compounded for decades. It is the largest controllable factor in a long projection.
- What happens if the market falls?
Over a long horizon, falls are part of the average. The 7% figure already includes historical crashes and recoveries.
The risk that matters is timing. A fall in year 19 of a 20-year plan is far more damaging than one in year 2, because there is no time to recover. This is why portfolios usually shift towards bonds as the goal approaches.
- Should I invest or pay off debt first?
Compare the rates. Credit card debt at 22% is a guaranteed 22% return if you clear it, and no investment offers that reliably.
Low-rate debt is different. A 3% mortgage is reasonable to keep while investing at an expected 7%. The dividing line is roughly whether the debt rate is above what you can confidently expect to earn.
- Where do taxes fit in?
In a taxable account, dividends and realised gains are taxed as you go, which drags on the compounding. In an IRA, 401(k) or Roth they are not.
That drag makes tax-advantaged accounts the first place to invest. A projection that ignores tax is really a projection of a tax-sheltered account.
Problems people actually run into
Projecting one steady return and planning around the exact figure
$300,851 looks like a number you can rely on. It is the average outcome of a process that in reality delivers years down 20% and years up 30%.
Use the projection to see the shape of compounding and to compare choices. For anything with a deadline, run a pessimistic return too and see whether the plan survives.
Ignoring fees because the percentage sounds small
1% a year does not sound like much next to a 7% return, but it is a seventh of the return, taken every year on a balance that keeps growing.
Check the expense ratio of everything you hold. It is the only input in this calculation you can change with certainty rather than hope.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026
