ROI Calculator — Return on Investment
Return on investment (ROI) measures how much profit an investment generates relative to its cost, expressed as a percentage: ROI = (final value − initial investment) ÷ initial investment × 100. Because it is a simple ratio, ROI lets you compare very different investments — stocks, real estate, a marketing campaign, or new equipment — on the same scale. This calculator returns the ROI percentage, the net profit in currency, and the annualized ROI when you provide the holding period.
Simple ROI ignores time, so a 20% return over one year and a 20% return over five years look identical. Annualized ROI fixes that by converting the total return into an equivalent yearly rate using compound growth, making it the fairer metric when comparing investments held for different periods. The side-by-side comparison mode applies both formulas to two investments at once. Results are informational only and do not constitute investment advice.
How it works
ROI = (Final Value − Initial Investment) ÷ Initial Investment × 100. Net Profit = Final Value − Initial Investment. Annualized ROI = ((Final Value ÷ Initial Investment)^(1 ÷ years) − 1) × 100.
Use cases
- Comparing the profitability of two investments with different amounts and holding periods
- Measuring the return of a marketing campaign against its total cost
- Evaluating whether a rental property purchase outperformed a benchmark
- Calculating the annualized return of a stock position held for several years
- Assessing the payback of new equipment or software for a small business
- Reviewing the outcome of a completed project before planning the next one
Frequently asked questions
How do you calculate return on investment (ROI)?
ROI is the gain or loss of an investment divided by its cost: ROI = (final value − initial investment) ÷ initial investment × 100. For example, buying an asset for $1,000 and selling it for $1,300 gives (1,300 − 1,000) ÷ 1,000 × 100 = 30% ROI. The same formula works for any currency and any type of investment.
What is the difference between ROI and annualized ROI?
Simple ROI measures the total return over the entire holding period, regardless of how long that period was. Annualized ROI converts the total return into an equivalent yearly compound rate using ((final ÷ initial)^(1/years) − 1) × 100. A 50% ROI earned over 5 years is only about 8.45% per year annualized, which makes annualized ROI the better metric for comparing investments with different durations.
What is considered a good ROI?
It depends on the asset class, the risk taken, and the time horizon — there is no universal threshold. A useful reference point is comparing your annualized ROI against low-risk alternatives available to you, such as government bonds or savings rates, and against broad stock market index returns. An ROI that beats those benchmarks after costs and taxes is generally attractive for the risk involved. This is general information, not investment advice.
Can ROI be negative?
Yes. Whenever the final value is lower than the initial investment, the formula produces a negative percentage, which represents a loss. For example, an investment of $2,000 that is now worth $1,700 has an ROI of (1,700 − 2,000) ÷ 2,000 × 100 = −15%. A −100% ROI means the entire invested amount was lost.
Does ROI include fees, taxes, and dividends?
Only if you include them in the numbers you enter. For an accurate result, add purchase fees and other costs to the initial investment, and include dividends, rent, or other income received in the final value. Taxes vary by country and situation, so calculate ROI both before and after tax if you want the complete picture.