Part of the Finance collection — 4 tools available
ROI Calculator — Return on Investment
Calculate return on investment as a percentage and dollar amount. Enter investment cost and return to see ROI, annualized return, and profit or loss.
About This Calculator
Return on investment is the fundamental metric for evaluating whether a financial decision was worthwhile — whether you're assessing a rental property, a business venture, stock trades, or even home improvements. ROI compares your net profit to your total investment cost as a percentage, making it easy to compare opportunities across different asset classes and investment amounts. A $5,000 investment that returns $6,500 has a 30% ROI, while a $50,000 investment returning $55,000 only has a 10% ROI. Our ROI calculator handles both simple and annualized returns for accurate comparisons.
The Formula Behind This Calculator
ROI = (Gain - Cost) / Cost * 100% Annualized = ((1+ROI)^(1/years) - 1) * 100 ROI ignores time value of money.
Understanding the math helps you verify results and make better decisions for your project.
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How to Use
- 1Enter the total amount you invested.
- 2Enter the total amount you received (or expect to receive).
- 3Enter how long you held (or plan to hold) the investment.
- 4Click Calculate for total ROI and annualized return.
When to Use
- →Evaluating whether a past investment performed well by calculating its annualized return
- →Comparing two investment opportunities with different time horizons on an equal annual basis
- →Determining if a business venture or real estate flip generated a worthwhile return
Tips
- ✓Always compare investments using annualized return — a 50% total return over 5 years is only ~8.4% per year
- ✓ROI doesn't account for risk — a 20% return on a speculative crypto bet isn't automatically better than 8% from index funds
- ✓Factor in taxes, fees, and inflation to get your real return — nominal ROI can be misleading without these deductions
FAQ
What is a good ROI?
Stock market historical average: ~10% per year (7% after inflation). Real estate: 8-12% including appreciation and rental income. Anything consistently above 15%/year is excellent.
What is annualized return?
It converts total return into a yearly rate for fair comparison. A 50% return over 5 years is ~8.4%/year annualized, not 10%.
Does ROI account for risk?
No. ROI is a pure return measure. Always consider risk alongside return — a 20% ROI on a risky venture isn't necessarily better than 8% on a stable investment.
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