How to use this ROI calculator
- Choose your currency.
- On the ROI tab, enter the amount invested and the amount returned: what the investment was worth at the end, or what you got back from it.
- Optionally add how long you held it, either as a length in years and months or as start and end dates. This unlocks the annualized ROI.
- Press Calculate. Gains are shown in green with ▲ and losses in red with ▼.
- On the Target ROI tab, work backwards: enter your investment and the ROI you want to see how much you need to get back, and the yearly return that would take.
What is ROI?
Return on investment (ROI) measures how much you gained or lost compared with what you put in. Because it is a percentage, it lets you compare investments of very different sizes, from a $500 marketing campaign to a $50,000 renovation.
ROI = (Amount returned − Amount invested) ÷ Amount invested × 100
Worked example: you invest $5,000 and three years later it is worth $6,500.
Gain: $6,500 − $5,000 = $1,500. ROI: $1,500 ÷ $5,000 × 100 = 30%. The return multiple is 6,500 ÷ 5,000 = 1.30×.
Annualized ROI: why time matters
Plain ROI ignores how long the money was tied up. Annualized ROI fixes that by turning the total result into an equivalent yearly growth rate, assuming gains compound:
Annualized ROI = (Amount returned ÷ Amount invested)1 ÷ years − 1
Compare two investments. One returns 50% in 2 years; the other returns 60% in 5 years. The second looks better at first glance, but:
- 50% over 2 years: 1.51/2 − 1 ≈ 22.47% a year
- 60% over 5 years: 1.61/5 − 1 ≈ 9.86% a year
The first investment grew more than twice as fast. In the worked example above, 30% over three years annualizes to about 9.14% a year. Be careful with very short periods, though: annualizing a one-month gain assumes it would repeat all year, which can produce unrealistic numbers.
What counts as “cost” and “return”?
ROI is only as good as the numbers you put in. For a realistic figure:
- Include all the costs in the amount invested: purchase price, fees, commissions, setup costs and any extra money you added along the way.
- Include everything you got back in the amount returned: the final value or sale price, plus dividends, interest or rent you received, minus selling costs.
- Decide whether to count taxes and stick to it. After-tax ROI is usually the more honest number for personal decisions.
The most important rule is consistency: if you compare two investments, measure both in the same way.
ROI's limits
ROI is a quick, useful snapshot, but it doesn't measure risk: a 20% return from a savings account and a 20% return from a speculative bet are not the same. It also assumes a single amount in and a single amount out. If you add money regularly, such as monthly contributions, the Investment Calculator gives a clearer picture.
Frequently asked questions
What is a good ROI?
There is no single answer. A good ROI is one that beats the alternatives you could have chosen with the same money, time and risk, and that stays ahead of inflation. Compare annualized ROI rather than total ROI so that investments of different lengths are judged fairly.
What is the difference between ROI and annualized ROI?
ROI is the total gain or loss as a percentage of what you invested, however long it took. Annualized ROI spreads that result over the time held and shows the equivalent yearly growth rate, assuming gains compound. 50% over 2 years is about 22.47% a year; 60% over 5 years is only about 9.86% a year.
Can ROI be negative?
Yes. If you get back less than you put in, ROI is negative. Getting back nothing at all is a total loss, which is an ROI of −100%. The calculator shows losses in red with a down arrow.
How do I annualize ROI for less than a year?
The same formula works, but the result assumes the short-term return would repeat for a whole year. A 5% gain in one month annualizes to almost 80%, which is rarely realistic. Treat annualized figures for short periods with care.
Does ROI include fees and taxes?
Only if you include them. Add fees, commissions and other costs to the amount invested, and subtract selling costs and taxes from the amount returned, to get a more realistic ROI. Whatever you choose, be consistent when comparing investments.
Is ROI the same as profit margin?
No. ROI compares profit with the money invested, while profit margin compares profit with sales revenue. A business can have a thin profit margin but a high ROI if it turns its money over quickly.
Results are estimates for educational purposes only and are not financial advice.