How to use the ROI Calculator
- Enter the amount invested, including any fees you paid to buy.
- Enter the amount returned: the sale proceeds or current value plus any income received.
- Set the holding period as a length in years, or switch to Start and end dates.
- Read the net gain, total ROI, annualized ROI and value multiple.
Features
- Net gain or loss and total ROI percentage
- Annualized ROI (CAGR) for fair comparisons
- Period as years or exact start and end dates
- Value multiple: how many times your money
- Highlights losses and very short periods
The ROI formula
Return on investment expresses a gain or loss as a percentage of what you put in: ROI = (Amount returned − Amount invested) ÷ Amount invested × 100. If you invested 10,000 and ended with 14,000, your net gain is 4,000 and the ROI is 40%.
The amount returned should include everything you got back: sale proceeds, dividends, interest or rent, minus selling costs. The amount invested should include purchase fees.
Why annualized ROI matters
Total ROI ignores time. A 40% gain is excellent over one year and unremarkable over fifteen. Annualized ROI, also called the compound annual growth rate (CAGR), converts the total into an equivalent yearly rate:
Annualized ROI = (Amount returned ÷ Amount invested)1 ÷ years − 1
For 10,000 growing to 14,000 in 3 years, that is 1.41/3 − 1 = 11.87% a year. It is less than 40 ÷ 3 = 13.3%, because annualizing assumes gains compound on earlier gains.
| Total ROI | Over | Annualized |
|---|---|---|
| 50% | 2 years | 22.47% |
| 50% | 5 years | 8.45% |
| 100% | 7 years | 10.41% |
| 100% | 10 years | 7.18% |
Using dates
When you know the exact purchase and sale dates, switch to the date mode. The calculator counts the days between them and divides by 365.25 to allow for leap years. Be careful with periods under a year: annualizing a 10% gain made in one month implies a yearly rate above 200% that is unlikely to repeat, so the calculator shows a warning.
Limits of a simple ROI
- Money added or withdrawn. If cash went in or out during the period, a single ROI figure is distorted. Money-weighted (IRR) or time-weighted returns handle that better.
- Inflation. A 20% return over five years with 3% inflation is a much smaller real gain. Check it with the Inflation Calculator.
- Risk. Two investments with the same ROI may have taken very different risks to get there.
- Taxes and fees. Use after-tax amounts to see what you actually keep.
ROI in business
Businesses use ROI to compare projects, marketing campaigns or equipment purchases. A campaign that cost 2,000 and produced 5,000 of extra gross profit has an ROI of 150%. Use gross profit rather than revenue, or the ROI will be overstated; the Profit Margin Calculator helps you find it.
All results are estimates for information only and are not financial advice.
Frequently asked questions
How do you calculate ROI?
Subtract the amount invested from the amount returned, divide by the amount invested and multiply by 100. 10,000 growing to 14,000 is a 40% ROI.
What is the difference between ROI and annualized ROI?
ROI is the total return over the whole period. Annualized ROI spreads it into an equivalent yearly rate, so you can compare investments held for different lengths of time.
Is annualized ROI the same as CAGR?
Yes. For a single amount invested at the start and taken out at the end, annualized ROI and compound annual growth rate are the same calculation.
What is a good ROI?
There is no single answer. Compare the annualized figure with what you could earn elsewhere at similar risk, such as a savings account, a bond fund or a broad stock index fund.
Can ROI be negative?
Yes. If you got back less than you invested, the gain and ROI are negative. Losing everything is an ROI of −100%.