What the ROI Calculator Tells You
Return on investment (ROI) measures how much you gained or lost compared with what you put in. This ROI calculator shows your net profit, your total ROI as a percentage and your annualized ROI, which is the yearly rate of return that would produce the same result. It works for stocks, real estate, business projects, marketing campaigns and any other investment.
ROI and Annualized ROI Formulas
Total ROI = (Final Value − Initial Investment) ÷ Initial Investment × 100.
Annualized ROI = (Final Value ÷ Initial Investment)^(1 ÷ years) − 1. This is also called the compound annual growth rate (CAGR).
Example: you invest $5,000 and it grows to $8,000 over 4 years. Net profit is $3,000 and total ROI is 60%. The annualized ROI is (8,000 ÷ 5,000)^(1/4) − 1, or about 12.5% per year.
Why Annualized ROI Matters
Total ROI ignores time. A 60% return over 4 years and a 60% return over 15 years look the same, but they are very different investments. Annualized ROI puts returns on a per-year basis so you can fairly compare investments held for different lengths of time.
Frequently Asked Questions
What is a good ROI?
It depends on the risk involved. As a rough benchmark, the broad U.S. stock market has historically averaged around 7–10% per year over long periods. Riskier investments should offer the potential for higher returns.
Should I include fees and costs in my ROI?
Yes. For an accurate result, add purchase costs, commissions and fees to your initial investment, and subtract selling costs from your final value. Otherwise your ROI will look better than it really is.
Can ROI be negative?
Yes. If the final value is less than the initial investment, ROI is negative, which means you lost money. For example, $1,000 that falls to $800 has an ROI of −20%.