What Is a Good ROI? Benchmarks by Investment Type and Time Period
A good ROI is one that beats inflation and your next-best alternative. As an annual figure, roughly 7% after inflation matches the long-run average of a diversified stock index, 4%-5% is what insured cash currently pays, and paying off a 20% credit card is a guaranteed 20%. Always convert total ROI into an annual rate before judging it — 30% over 10 years is only 2.7% per year. Run your own numbers in the ROI calculator.
Is your ROI good? Check it here
Enter what you put in, what it is worth now, and how long you held it.
Total ROI
30.0%
Annualized (CAGR)
9.1%
What this means: In line with the long-run average of a diversified stock index.
Educational estimate only — excludes taxes and fees unless you include them in the cost.
The ROI formula
ROI = (Final value − Total cost) ÷ Total cost × 100
Example: you spend $10,000 including fees and sell for $13,000. Net gain is $3,000, so ROI is 30%. To annualize, use CAGR: (Final ÷ Cost)^(1 ÷ years) − 1. Over 3 years that 30% becomes about 9.1% per year.
Include every real cost — commissions, platform fees, renovation, downtime — in the cost side, and subtract taxes from the gain. An ROI that ignores costs flatters every investment equally, which makes it useless for comparison.
Average ROI by investment type
| Where the money goes | Typical return | What to know |
|---|---|---|
| High-yield savings / CD | 4% - 5% per year | Guaranteed and insured; barely ahead of inflation. |
| Broad stock index (long run) | ~10% nominal, ~7% real | Historical long-run average; individual years swing widely. |
| Bonds (investment grade) | 4% - 6% per year | Lower volatility, sensitive to rate changes. |
| Paying off credit card debt | 18% - 25% guaranteed | Equivalent to a risk-free return equal to your APR. |
| Rental property (cap rate) | 5% - 10% per year | Before appreciation; depends heavily on local market. |
| Small business project | 15% - 30% target | Higher hurdle because failure risk is real. |
Historical and illustrative ranges for education only. Past performance does not predict future returns, and this is not investment advice.
S&P 500 historical returns: the default benchmark
Most people who ask "is this a good ROI?" are really asking "would a plain index fund have done better?" Since 1957, the S&P 500 has averaged roughly 10% per year nominal and about 7% after inflation, with dividends reinvested. Averages hide the ride: single years have ranged from about −37% (2008) to +38% (1995).
| Holding period | Annualized nominal return | Roughly after 3% inflation |
|---|---|---|
| Since 1957 (long run) | ~10% | ~7% |
| Last 30 years | ~10% | ~7% |
| Last 20 years | ~10% | ~7% |
| Last 10 years | ~12% | ~9% |
| Worst 10-year stretch (2000s) | ~-1% | ~-4% |
Practical way to use this: if a deal, side business, or rental promises less than about 7%-10% per year after all costs and taxes, ask what extra risk, work, or illiquidity you are being paid for. If it promises far more, the extra return is compensation for risk you are taking on — not a free upgrade.
Long-run returns by asset class
| Asset class | Long-run annualized | Main risk |
|---|---|---|
| US large-cap stocks (S&P 500) | ~10% nominal | Deep multi-year drawdowns |
| US small-cap stocks | ~11%-12% nominal | Higher volatility, longer recoveries |
| International developed stocks | ~8%-9% nominal | Currency and policy risk |
| Investment-grade bonds | ~4%-5% nominal | Rate and inflation risk |
| US residential real estate (price only) | ~4% nominal | Illiquidity, upkeep, leverage |
| Gold | ~5%-7% nominal | No cash flow, long flat decades |
| Cash / T-bills | ~3%-4% nominal | Barely beats inflation |
Historical and illustrative ranges for education only. Past performance does not predict future returns, and this is not investment advice.
What is a good ROI over 1, 3, 5 and 10 years?
Total ROI thresholds that correspond to roughly 3%, 7% and 10% per year:
| Holding period | Weak (~3%/yr) | Solid (~7%/yr) | Strong (~10%/yr) |
|---|---|---|---|
| 1 year | 3% | 7% | 12% |
| 3 years | 9% | 22% | 40% |
| 5 years | 16% | 40% | 76% |
| 10 years | 34% | 97% | 159% |
ROI vs CAGR vs annualized return
ROI answers "how much did I gain in total?" CAGR answers "what steady yearly rate would have produced that?" Use ROI for one-off projects with a fixed end date, and CAGR whenever you compare things held for different lengths of time — otherwise the longer investment always looks better than it is.
CAGR also smooths volatility: a portfolio that gains 40% then loses 20% has a total ROI of 12% and a CAGR of about 5.8% per year, not the 10% an average of the two years suggests. The compound interest calculator shows the same maths from the growth side.
How to judge your own ROI
- • Compare to your debt. Any return below your loan APR loses to paying that loan down. See debt or invest.
- • Subtract inflation. A 5% return with 3% inflation is a 2% real gain — check with the inflation calculator.
- • Adjust for risk. An insured 4.5% CD and a 6% speculative bet are not comparable returns.
- • Count the time. Sweat equity on a project is a real cost even when no cash leaves your account.
ROI questions, answered
What is a good ROI?
How do you calculate ROI?
What is the difference between ROI and CAGR?
Is a 10% ROI good?
What is a good ROI over 3 years?
Can ROI be negative?
Does ROI include fees, taxes and inflation?
What is a good ROI for rental property?
Related tools and guides
Data current for 2026 tax year