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Total return is vanity; annualized return is sanity.
"I made 48%" means nothing until you know over how long. This calculator shows both numbers that matter: total ROI and annualized ROI (CAGR), which converts any multi-year gain into a per-year rate you can compare against index funds, savings accounts, or other deals. It works for stocks, property, a side business, or any investment with a buy-in and a payout.
Comparing investments honestly requires one number: annualized return. People use this to compare a rental property against an index fund, a side business against their 401(k), or any "I turned $X into $Y" claim against reality — because 48% over five years is very different from 48% over two.
Context decides. Broad stock-market index funds have historically returned roughly 7–10% annualized over long periods, so anything consistently above that is strong; a savings account near inflation is treading water. Compare annualized numbers, never totals.
Because of compounding. 48% over 2 years is 21.7% per year compounded, not 24%. Dividing by years (the "simple" method) overstates performance on multi-year holds.
Risk, taxes, and cash flow timing. Two investments with identical ROI can have wildly different risk. For multi-payment investments (rental property, businesses), an IRR calculation is more precise.