ROI Calculator
Calculate your return on investment (ROI), annualized ROI, and net profit. Perfect for evaluating the performance of any investment.
How to Use This ROI Calculator
Our free ROI (Return on Investment) calculator helps you measure the profitability of any investment. Whether you are evaluating stocks, real estate, a business venture, or any other investment, this tool provides a clear picture of your returns in both total and annualized terms.
Step-by-Step Instructions
- Enter your initial investment -- the amount you originally invested or paid.
- Enter the final value -- the current or expected value of the investment, including any income received.
- Enter the time period -- how many years you held (or plan to hold) the investment. Fractional years are supported (e.g., 2.5 years).
- Click "Calculate ROI" to see your total ROI, annualized ROI, and net profit.
Understanding the Results
Total ROI shows the overall percentage gain or loss on your investment. Annualized ROI (also called CAGR -- Compound Annual Growth Rate) shows the equivalent yearly return rate, making it easy to compare investments of different durations. Net Profit is the absolute dollar amount gained or lost.
ROI Formula
ROI = ((Final Value - Initial Investment) / Initial Investment) x 100. The annualized ROI uses the formula: ((Final Value / Initial Investment) ^ (1 / Years) - 1) x 100, which accounts for the compounding effect over multiple years.
Frequently Asked Questions
What is ROI (Return on Investment)?
ROI is a performance metric used to evaluate the efficiency or profitability of an investment. It measures the return relative to the cost of the investment. A positive ROI indicates a profitable investment, while a negative ROI indicates a loss.
What is the difference between ROI and annualized ROI?
Total ROI shows the overall return over the entire investment period, regardless of duration. Annualized ROI (CAGR) converts this to a yearly equivalent rate, making it possible to compare investments held for different lengths of time. For example, a 50% return over 5 years equals about 8.45% annualized ROI.
What is a good ROI?
What constitutes a "good" ROI depends on the investment type and risk. The S&P 500 stock index has historically returned about 10% per year. Real estate typically returns 8-12% including appreciation and rental income. Anything above the risk-free rate (Treasury bonds, currently 4-5%) could be considered a positive risk-adjusted return.
Does this calculator account for fees and taxes?
This calculator shows gross ROI before fees and taxes. For a more accurate picture, you should subtract any transaction fees, management fees, and capital gains taxes from your final value before calculating. After-tax ROI gives a better picture of your actual returns.
Can I use this for real estate investments?
Yes, this calculator works well for real estate. Use your total investment (including down payment, closing costs, and renovation costs) as the initial investment. For the final value, include the property's current market value plus any net rental income earned over the holding period.