| Year | Annual Revenue | Annual Operating Costs | Net Cash Flow Before Tax | Net Cash Flow After Tax | Discount Factor | Discounted Cash Flow | Cumulative Net Cash Flow | Cumulative Discounted Cash Flow |
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Calculate your true return on investment over time
Return on Investment Calculator Overview
The Return on Investment (ROI) Calculator helps you understand how your investment grows over time by combining your initial capital, annual contributions, compound returns, taxes on gains and the impact of inflation. Instead of looking only at a single percentage, this tool provides a full yearly breakdown so you can see how your portfolio evolves step by step.
What Is Return on Investment (ROI)?
Return on Investment measures how much profit you earn relative to the amount of money you have invested. The basic ROI formula is
\[ ROI = \frac{\text{Final Value} - \text{Total Invested}}{\text{Total Invested}} \times 100\% \]
If you invest \( 10{,}000 \) and your portfolio grows to \( 15{,}000 \), your profit is \( 5{,}000 \) and your ROI is
\[ ROI = \frac{15{,}000 - 10{,}000}{10{,}000} \times 100\% = 50\% \]
On its own, this number does not tell you how long the investment was held or how smooth the journey was. That is why this calculator also computes annualized and real returns.
Annualized Return and the Power of Compounding
The annualized return, often expressed as CAGR (Compound Annual Growth Rate), answers the question: “What constant yearly rate would turn my invested money into the final value over the selected period?” The formula is
\[ \text{CAGR} = \left( \frac{\text{Final Value}}{\text{Total Invested}} \right)^{\frac{1}{n}} - 1 \]
where \( n \) is the number of years. This smooths out the path and lets you compare different investments that have different time horizons.
The calculator applies this logic to your inputs and shows an annualized percentage, making it easy to compare your strategy with benchmarks or alternative opportunities.
Accounting for Inflation: Real Return
Nominal returns do not tell the full story because inflation erodes purchasing power. To measure how much your wealth really grows, you need the real return. A common approximation uses the relationship between nominal return and inflation:
\[ 1 + r_{\text{real}} = \frac{1 + r_{\text{nominal}}}{1 + i} \]
which can be rearranged to
\[ r_{\text{real}} = \frac{1 + r_{\text{nominal}}}{1 + i} - 1 \]
Here \( r_{\text{nominal}} \) is the annualized nominal return and \( i \) is the inflation rate. The calculator applies this formula to produce a real annual return, helping you understand how much your portfolio grows after inflation.
Why Taxes on Gains Matter
In many jurisdictions, investment gains are taxed. If you ignore tax, you might significantly overestimate your effective return. This calculator includes a configurable tax rate on gains, applied to the difference between your final portfolio value and the total capital invested.
The after-tax gain is
\[ \text{Gain}_{\text{after tax}} = (\text{Final Value} - \text{Total Invested}) \times (1 - t) \]
where \( t \) is the tax rate on gains. The calculator then subtracts the tax from the final value to present both the total gain after tax and the final portfolio value after tax, giving you a realistic picture of what you may keep.
How the Yearly Breakdown Works
For each year, the calculator follows a clear and repeatable sequence:
- Start with the opening balance for the year.
- Apply the chosen annual interest rate to compute interest earned.
- Add the interest to obtain an intermediate balance.
- Add the annual contribution at the end of the year.
- Update the cumulative contributions and compute the ROI to date as a percentage.
This process is repeated for every year in your investment horizon. The detailed table allows you to see how much of the growth comes from fresh contributions versus compounding returns.
Using the Customize Columns Feature
The yearly breakdown table integrates a flexible column customization tool. You can choose which columns to display and in what order they appear. The drag-and-drop interface lets you reorder columns by moving rows in the configuration list, and toggle switches allow you to hide or show each metric.
When you apply changes, the table is rebuilt so that the column order and visibility reflect your selections exactly. At least one column must remain visible at all times to preserve readability and accessibility.
Practical Use Cases for This ROI Calculator
This calculator is useful in many real-world situations:
- Evaluating a long-term savings plan with recurring yearly deposits.
- Comparing two investment strategies with different contribution patterns.
- Estimating the effect of a higher or lower return rate on your future wealth.
- Measuring the impact of taxes and inflation on your net outcome.
By adjusting the inputs and re-running the calculation, you can test different assumptions and build an intuition for how each variable influences your long-term results.
Limitations and Good Practices
Although the formulas used by the calculator are standard and robust, real markets are volatile and returns rarely follow a perfect straight line. It is wise to consider multiple scenarios and to be conservative with expected returns. You may also want to revisit your plan regularly as interest rates, inflation and tax rules change.
Still, by using a structured model with clear formulas such as \[ ROI \], \[ \text{CAGR} \] and \[ r_{\text{real}} \], you can make better informed decisions and align your investments with your long-term goals.