ROI
?
Gain
?
Annualised
?
Why the annualised figure is the one to compare
- A 50% return says nothing without a duration. 50% over one year is excellent; 50% over twenty is roughly 2% a year, which is worse than doing nothing in most periods.
- Plain ROI is still useful. It answers "how much did I make", which is the right question when the holding period is fixed or short.
- Losses come out negative. A value below the amount invested gives a negative return, which is the honest description.
- Nothing is annualised without a term. Leave the duration blank and the annualised field stays empty, rather than silently assuming one year.
- No fees, tax or dividends. Enter the net figures you actually experienced if you want the answer to reflect them.
The equivalent in Excel
ROI is =(final-initial)/initial. The annualised rate is =(final/initial)^(1/years)-1 — the same arithmetic as CAGR, which is what an annualised return is.