ROI Calculator

What is ROI Calculator?

ROI (Return on Investment) is the most widely used metric to evaluate the profitability of an investment. It expresses the gain or loss as a percentage of the original investment cost, making it easy to compare different investments regardless of their size. Our calculator computes both simple ROI and annualized ROI (CAGR). Simple ROI shows the total return, while annualized ROI adjusts for time, letting you compare a 2-year investment fairly against a 10-year one. Enter the amount invested, amount returned, and the investment duration to see your results with a visual breakdown.

How It Works

Enter three values: amount invested (your initial cost), amount returned (total value received back including the original investment), and the investment time in years. The calculator computes the gain (returned minus invested), ROI percentage, and annualized ROI using the CAGR formula. Results are shown with a donut chart visualizing the split between your original investment and the gain (or loss).

Formula

Gain = Amount Returned − Amount Invested
ROI (%) = (Gain / Amount Invested) × 100
Annualized ROI (%) = ((Amount Returned / Amount Invested)^(1/years) − 1) × 100

Formula Explained

Simple ROI is straightforward: divide gain by cost. The annualized formula uses the nth root (where n = years) to find the constant annual growth rate that would produce the same total return. This is mathematically equivalent to CAGR (Compound Annual Growth Rate). For example, investing $1,000 and getting back $2,000 over 7 years: annualized ROI = (2000/1000)^(1/7) − 1 = 10.41% per year.

Example

Invested: $1,000, Returned: $1,200, Time: 1 year Gain: $200 ROI: ($200 / $1,000) × 100 = 20.00% Annualized ROI: 20.00% (same as ROI for 1 year) Invested: $5,000, Returned: $8,000, Time: 3 years Gain: $3,000 ROI: 60.00% Annualized ROI: (8000/5000)^(1/3) − 1 = 16.96%

Tips & Best Practices

✓Always use annualized ROI when comparing investments of different durations.
✓Remember to include all costs (fees, taxes, commissions) in your "amount invested" for accurate ROI.
✓A negative ROI means a loss — but consider if the investment has unrealized future potential.
✓ROI does not account for risk — a 10% ROI from a savings account is very different from 10% in crypto.

Common Use Cases

•Evaluating the profitability of a business investment
•Comparing returns across stocks, real estate, and other asset classes
•Measuring the effectiveness of marketing campaigns (marketing ROI)
•Calculating real estate investment returns after sale
•Presenting investment performance to stakeholders

Frequently Asked Questions

ROI (Return on Investment) is a percentage that measures the profit or loss relative to the cost of an investment. Formula: ROI = (Gain / Cost) × 100. An ROI of 50% means you earned half of your investment back as profit. A negative ROI means you lost money.

Annualized ROI converts the total return into an equivalent annual rate, allowing you to compare investments of different durations. Formula: ((Returned/Invested)^(1/years) − 1) × 100. A 50% ROI over 5 years is an annualized ROI of about 8.45% per year.

Simple ROI shows the total return regardless of time. Annualized ROI (also called CAGR) shows the equivalent yearly return. A 100% ROI over 1 year is much better than 100% over 10 years — annualized ROI captures this difference (100% vs 7.18% annually).

It depends on the investment type and risk. Stock market average: ~10% annually (before inflation). Real estate: 8-12% annually. Savings accounts: 4-5% currently. Higher-risk investments should offer higher potential ROI to compensate for the risk.

Our calculator shows nominal ROI (not adjusted for inflation). To get real ROI, subtract the inflation rate from your annualized ROI. If your annualized ROI is 8% and inflation is 3%, your real return is approximately 5%.