Total ROI Is Not the Same as a Money-Weighted Annual Return
Total ROI compares the gain or loss with the capital invested. It is useful for a simple start-to-finish comparison when the cash-flow assumptions are clear.
If an investment has contributions or withdrawals at different dates, a proper money-weighted annual return requires those dated cash flows. The calculator does not invent an IRR or CAGR from undated additions.
ROI is deliberately simple: it relates the gain or loss to the amount invested. That makes it useful for a quick comparison, but it does not automatically account for timing, risk or irregular cash flows. A 20% return earned over one year and the same 20% earned over five years are not equivalent experiences. When time matters, look at an annualized measure as well; when money moved in and out during the period, use a return method designed for those cash flows rather than forcing everything into a basic ROI percentage.
Frequently Asked Questions
Can extra contributions be annualized without dates?
No. The timing of cash flows matters. A proper IRR or XIRR requires dated contributions and withdrawals.
When is simple ROI not enough?
When investments have different holding periods, irregular contributions or withdrawals, or very different risk. In those cases an annualized or cash-flow-aware return measure can provide more context.
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