Purpose and steps
Total ROI = (final value − initial investment − annual deposits × years) / total invested. Solve the annual rate whose initial-value growth and equal end-of-year annuity equal the final portfolio value. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Initial investment, End-of-year contribution, Years, Final portfolio value after last contribution, Annual inflation. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: Annualized return accounts for deposit timing; dividing total ROI by years does not.
- Compare the baseline with a changed scenario: The real annualized rate removes the entered inflation rate using a ratio, not simple subtraction.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Initial investment | 10000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| End-of-year contribution | 1000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Years | 10 years | Use years here. The model converts to months when the payment schedule requires it. |
| Final portfolio value after last contribution | 30000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Annual inflation | 3 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
Model-specific method
How this calculator produces its result
Total ROI = (final value − initial investment − annual deposits × years) / total invested. Solve the annual rate whose initial-value growth and equal end-of-year annuity equal the final portfolio value.
Geometric growth and a stream of contributions
Compound growth multiplies the previous balance, including earlier interest, by the next period’s growth factor. The contribution term is another geometric sum: the first deposit compounds for longer than the last. It applies only to equal deposits and a constant rate; growing contributions require a different sum or period-by-period simulation.
A nominal rate compounded m times per year has effective annual growth (1+j/m)^m−1. An already effective annual return converts to a monthly rate as (1+g)^(1/12)−1. These are different conventions, so use the one specified by the tool. A constant return model says nothing about volatility or sequence-of-returns risk.
FV = P(1+r)^n FV of end-period deposits = C × ((1+r)^n − 1)/r Beginning-period deposits multiply the deposit term by (1+r)
- P: initial amount
- C: equal contribution per period
- r: growth rate for that period
- n: periods, with contributions and growth on the same schedule
Worked example
A $10,000 initial investment plus $1,000 at each year-end for ten years invests $20,000 in total. A final value of $30,000 is a $10,000 gain and 50% total ROI, not 5% annualized.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- Total investment ROI
- 50%
- Total money invested
- 20,000 USD
- Net gain / loss
- 10,000 USD
- Final portfolio value
- 30,000 USD
- Annualized money-weighted return
- 5.52%
- Inflation-adjusted annualized return
- 2.45%
- Final value in today’s dollars
- 22,322.82 USD
Reading results without overstating them
- Annualized return accounts for deposit timing; dividing total ROI by years does not.
- The real annualized rate removes the entered inflation rate using a ratio, not simple subtraction.
Assumptions and exclusions
- Assumes equal end-of-year deposits and a terminal value after the last deposit, with no withdrawals, fees or taxes. Annualization is unavailable when that terminal value cannot fit this timing model.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
Report a formula, example or translation issue through our contact page. Include the tool name, inputs and expected result so it can be reproduced. Contact Toolify