ROI Calculator

Measure the profitability and performance of your investments.

What This ROI Calculator Does

This free ROI calculator measures the return on investment for any money you put to work - a stock, a rental property, a business project, or a piece of equipment. Enter what you paid and what you got back, and it shows your total gain, ROI percentage, annualized return, and investment multiple.

How to Use This Calculator

  1. Enter the Amount Invested. This is your total cost, including the purchase price plus any fees, commissions, closing costs, or setup expenses.
  2. Enter the Amount Returned. This is the total value you received back - the sale price or current value, plus any income the investment paid along the way, minus selling costs.
  3. Enter the Investment Period in years. Partial years are fine - use 0.5 for six months. This drives the annualized ROI figure.
  4. Read the results. The cards update instantly with your dollar gain, total ROI, annualized ROI, and investment multiple.

Worked Example

Suppose you invest an example $10,000 and receive $15,000 back after 3 years. Your net profit is $5,000, so your total ROI is $5,000 ÷ $10,000 = 50%. Your investment multiple is 1.5x.

The annualized ROI answers a different question: what steady yearly return would turn $10,000 into $15,000 over 3 years? The math is (15,000 ÷ 10,000)1/3 − 1, which works out to about 14.5% per year. Notice it is not simply 50% divided by 3 (16.7%), because compounding means each year's gain builds on the last.

This is why the holding period matters. The same 50% total return earned over 10 years would annualize to only about 4.1% per year. All figures here are illustrative examples, not predictions of what any investment will return.

Professional User Guide

1. Total vs. Annualized Return

While "Total ROI" shows your absolute profit percentage, "Annualized ROI" is more useful for comparing investments of different lengths. A 50% return over 10 years is actually less efficient than a 20% return over 2 years when looked at annually.

2. Factoring in Costs

To get an accurate ROI, the "Amount Invested" should include all purchase costs, fees, and commissions. Similarly, the "Amount Returned" should be the net value after any selling costs or taxes are deducted.

3. Compare Against Alternatives

An ROI figure means little on its own. Judge it against what the same money could have earned elsewhere at similar risk - a savings account, an index fund, or paying down debt.

4. Remember What ROI Ignores

ROI does not capture risk, inflation, or your time and effort. A rental property and a stock fund can show the same ROI while demanding very different amounts of work. For long holding periods, check your result against an inflation-adjusted figure too.

Common ROI Mistakes to Avoid

Leaving out costs. Fees, commissions, maintenance, and taxes all reduce your real return. An investor who buys a property for an example $200,000, spends $20,000 on repairs, and sells for $250,000 did not earn 25% - the true cost basis is $220,000, so the ROI is about 13.6%.

Ignoring the time frame. Comparing a 30% return earned over 6 years to a 15% return earned over 1 year using total ROI alone will point you at the wrong winner. Always use annualized ROI when holding periods differ.

Forgetting income along the way. Dividends, rent, and interest are part of your return. Add them to the Amount Returned, or your ROI will understate how the investment actually performed.

Treating projected ROI as guaranteed. Estimates of future value are assumptions, not promises. Test your inputs with a pessimistic case as well as an optimistic one.

Frequently Asked Questions

How is ROI calculated?

ROI = [(Net Profit) / (Cost of Investment)] × 100. It measures the gain or loss generated on an investment relative to its cost.

What is Annualized ROI?

Annualized ROI calculates the geometric mean return per year, allowing you to compare the performance of investments held for different lengths of time.

What is a good ROI?

It depends on the risk and the alternatives. A return should be judged against other investments with similar risk. Many investors use the long-run average return of a broad stock market index as a rough benchmark, but there is no single number that counts as good for every asset.

Can ROI be negative?

Yes. If the amount returned is less than the amount invested, ROI is negative. For example, investing $10,000 and getting back $8,000 is a -20% ROI.

Should I include fees and taxes in ROI?

Yes. For an accurate result, add purchase costs, commissions, and fees to the amount invested, and subtract selling costs and taxes from the amount returned. Ignoring costs overstates your real return.

Does ROI account for how long the money was invested?

Basic ROI does not - it only compares money out to money in. That is why this calculator also shows annualized ROI, which spreads the return over the holding period so you can compare investments of different lengths fairly.

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