ROI Calculator

Calculate return on investment (ROI) and annualized ROI. Compare investment profitability with dates or time periods.

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Understanding ROI

Return on Investment (ROI) is the most widely used metric for evaluating investment profitability. It expresses profit as a percentage of the original investment cost, making it easy to compare different opportunities regardless of size.

ROI Formula

ROI = (Amount Returned − Amount Invested) / Amount Invested × 100

For example, if you invest $8,500 and receive $14,200 back, your ROI is ($14,200 − $8,500) / $8,500 × 100 = 67.06%.

ROI vs Annualized ROI

Metric	What It Measures	Best For
ROI	Total return as % of cost	Single investment evaluation
Annualized ROI	Equivalent yearly return	Comparing investments of different durations

A 100% ROI sounds great, but if it took 10 years, the annualized ROI is only 7.2%. Meanwhile, a 30% ROI in 1 year (30% annualized) is far more impressive. Always compare annualized returns when evaluating different investments.

Annualized ROI Formula

Annualized ROI = (1 + ROI)^1/years − 1

This formula accounts for compound growth. Simply dividing ROI by years would understate returns for short periods and overstate them for long periods.

Typical Investment Returns

Investment Type	Historical Annual Return	Risk Level
S&P 500	~10%	Moderate
Real Estate	8-12%	Moderate
Bonds (US Treasury)	4-6%	Low
High-Yield Savings	4-5%	Very Low
Venture Capital	15-25%	Very High

Limitations of ROI

Ignores time: Basic ROI doesn't account for how long money was invested — use annualized ROI instead
Ignores risk: A 10% return from a savings account is very different from 10% in crypto
Ignores cash flow timing: ROI assumes a single investment and return — for ongoing investments, use IRR
Ignores taxes and fees: Real-world returns are reduced by capital gains tax, management fees, and transaction costs
Ignores inflation: A 5% return with 3% inflation is only 2% in real purchasing power

Tips

Always annualize: Compare investments on an annualized basis to account for different holding periods
Include all costs: Factor in fees, taxes, maintenance, and opportunity costs for a true ROI
Consider risk-adjusted returns: Higher ROI with higher risk isn't necessarily better
Use dates for precision: The date mode calculates exact investment duration for more accurate annualization

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Frequently Asked Questions

How do you calculate ROI?

ROI = (net gain / cost) × 100. Subtract fees and taxes from the gain first: a $5,000 gain on a $20,000 investment with $400 in fees and $800 in taxes is a net gain of $3,800, or a 19% ROI. A loss gives a negative ROI, so investing $10,000 and getting back $8,000 is an ROI of -20%.

What is a good ROI?

A good ROI beats inflation of about 3% to 4% and pays enough for the risk taken. The S&P 500 has historically returned about 10% a year, and real estate averages about 8% to 12%. An investment that returns less than a broad stock index fund, with more risk, is usually not worth it.

What is annualized ROI?

Annualized ROI converts a total return into an equivalent yearly rate, using (1 + ROI)^(1/years) - 1. A 100% return over 5 years is about 14.9% a year, not 20%, because growth compounds. Annualizing is the only fair way to compare investments held for different lengths of time, since basic ROI ignores time entirely.

What is the difference between ROI and IRR?

ROI measures total return as a percentage of cost and ignores when the money came in or went out. Internal rate of return (IRR) is the yearly discount rate at which all cash flows break even in present value, so it accounts for timing. IRR is the better measure for investments with several deposits, withdrawals or irregular payments.