How it is calculated
ROI = (final value + income − cost) ÷ cost × 100 CAGR = ((final value + income) ÷ cost)^(1/years) − 1ROI is the total gain; CAGR spreads it across the years with compounding — the right figure for comparing a 2-year and a 5-year investment.
Worked example
A property bought for 500,000 plus 20,000 fees, sold after 4 years for 650,000 with 60,000 rent collected: gain = 190,000, ROI = 36.5%, CAGR ≈ 8.1%.
Frequently asked questions
ROI vs annual return?
ROI is the total gain over the whole period; CAGR is the average yearly compound growth.
Should I include taxes and fees?
Yes — add all fees to cost and subtract taxes from the final value for a net return.
Is a 20% ROI good?
It depends on time and risk: 20% in a year is excellent; 20% over ten years is under 2% a year.