ROI Calculator – Return on Investment and Annualized ROI
Work out how much an investment earned in percent, how many times your money grew and what that means per year — for stocks, property, marketing campaigns or a new machine.
ROI = (final value − amount invested) ÷ amount invested × 100. Investing $10,000 and getting back $14,500 is an ROI of 45 %. Over 3 years that equals an annualized ROI of about 13.2 % per year.
How to use ROI Calculator
- Enter the amount you invested.
- Enter the final value or total amount you got back.
- Optionally enter how many years the money was invested.
- Read the ROI, the net profit and the annualized ROI.
- Compare it with other investments using the annual figure.
The ROI formula
ROI = (final value − cost) ÷ cost × 100
Return on investment shows profit as a percentage of what you put in. If you invest $10,000 and end up with $14,500, the profit is $4,500 and the ROI is 4,500 ÷ 10,000 = 45 %. The money multiple is 1.45×: every dollar became $1.45.
Why the annualized ROI matters
A plain ROI ignores time. 45 % in three years is good; 45 % in fifteen years is weak. The annualized ROI (also called CAGR, compound annual growth rate) solves this:
Annualized ROI = (final ÷ cost)^(1 ÷ years) − 1
| Total ROI | Over 1 year | Over 3 years | Over 10 years |
|---|---|---|---|
| 20 % | 20.0 % a year | 6.3 % a year | 1.8 % a year |
| 45 % | 45.0 % a year | 13.2 % a year | 3.8 % a year |
| 100 % | 100 % a year | 26.0 % a year | 7.2 % a year |
Always compare investments by their annual figure, not the total.
What to include in cost and return
For an honest ROI, the cost should contain everything you spent: purchase price, fees, commissions, taxes paid and running costs. The return should include all income: sale price, dividends, rent or extra profit. Leaving out fees makes almost every investment look better than it was.
ROI for business and marketing
ROI is also used to judge projects. A marketing campaign that cost $2,000 and brought $5,000 of extra gross profit has an ROI of 150 %. Use profit, not revenue, as the return; otherwise campaigns that sell at a loss look successful. For pricing decisions, the Profit Margin Calculator and Break-Even Calculator calculators go deeper.
Limits of ROI
ROI does not measure risk. A safe 6 % may be better than a risky 9 %. It also ignores the timing of cash flows inside the period: money received early is worth more than money received late. For savings with regular deposits, the Compound Interest Calculator calculator shows the growth year by year.
You may also find these free tools useful: Compound Interest Calculator, Fuel Cost Calculator and Electricity Cost Calculator.
Frequently asked questions
How do you calculate ROI?
Subtract the cost from the final value, divide by the cost and multiply by 100. $10,000 that becomes $14,500 gives (4,500 ÷ 10,000) × 100 = 45 %.
What is a good ROI?
It depends on risk and time. Broad stock indexes have historically returned about 7–10 % a year before inflation; compare against that and against safe savings rates.
What is annualized ROI?
The yearly growth rate that would produce the same total result, also called CAGR. It lets you compare investments held for different lengths of time.
Can ROI be negative?
Yes. If you get back less than you invested, the ROI is negative — for example −20 % when $10,000 becomes $8,000.
Should fees be included?
Yes. Add all purchase fees, commissions and running costs to the cost, otherwise the ROI is too high.
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