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ROI Calculator – Return on Investment & Annualized ROI

Calculate your Return on Investment (ROI), annualized compound return, net profit or loss, and total investment multiple. Evaluate stocks, real estate, business ventures, or marketing campaigns with full cost adjustments.

100% Free · Simple & Annualized ROI Modes
Investment Numbers Capital & Returns
Original purchase/capital
$
Sale price / total value
$
Commissions, repairs, tax
$
Time invested
Years
Months
Total Return on Investment (ROI)
+57.14%
Net Profit: $6,000.00 (Gain)
Net Profit / Capital Gain
$6,000.00
Return − Total Cost
Annualized ROI (CAGR)
+16.26% / yr
Compound annual yield
Total Cost Basis
$10,500.00
Capital + expenses
Total Amount Returned
$16,500.00
Gross final revenue
Simple ROI
+57.14%
Total period return
Investment Multiple
1.57x
Gross return ÷ Cost

Cost Basis & Profit Breakdown

Capital Distribution
Initial Investment
Additional Expenses
Net Profit Gain

Asset Class Benchmark Comparison

Benchmark / Asset Annualized Yield Performance
Ad Placement — Mid Page

Understanding Return on Investment (ROI)

Return on Investment (ROI) is one of the most widely used performance metrics in finance. It measures the net profitability of an investment relative to its total acquisition and operational costs. Expressed as a percentage, ROI enables direct, objective comparison between entirely different financial opportunities — such as comparing a rental property purchase against an index fund portfolio or marketing campaign.

Simple ROI = [ ( Final Value − Total Cost ) ÷ Total Cost ] × 100
Total Cost: Initial Capital + Maintenance, Broker Fees, Taxes, or Transaction Costs.
Net Profit: Final Value Returned − Total Cost.
Investment Multiple: Final Value Returned ÷ Total Cost.

Simple ROI vs. Annualized ROI: Why Time Matters

A common trap in financial analysis is relying solely on simple ROI. Suppose Investment A delivers a 50% ROI over 10 years, while Investment B delivers a 20% ROI in 1 single year. At first glance, Investment A seems superior. But when converted into Annualized ROI (Compound Annual Growth Rate):

  • Investment A Annualized ROI: (1 + 0.50)1/10 − 1 = 4.14% per year
  • Investment B Annualized ROI: 20.00% per year

Investment B dramatically outperformed Investment A on a time-adjusted basis. Our calculator provides both metrics automatically.

Annualized ROI = [ ( Final Value ÷ Total Cost )^(1 ÷ Years) − 1 ] × 100
Years: Total holding period in fractional years (Years + Months ÷ 12).
Compound Rate: The steady geometric annual growth rate required to generate the final return.

Real-World ROI Examples

  • Stock Market Equity: You invest $10,000 in an index ETF and pay $20 in trading commissions. After 5 years, you sell all shares for $16,500. Your net profit is $6,480. Your simple ROI is 64.67%, and your annualized ROI is 10.49% per year.
  • Real Estate Flip / Rental: You purchase a duplex for $200,000, spend $30,000 on renovations, and pay $5,000 in legal and closing fees (Total Cost = $235,000). You sell the property two years later for $290,000. Your net profit is $55,000, representing a simple ROI of 23.40% and an annualized ROI of 11.09%.
  • Small Business / Marketing Campaign: A company spends $15,000 running targeted online ad campaigns that generate $45,000 in incremental revenue. Net profit is $30,000, yielding a marketing ROI of 200% (a 3.0x return on ad spend).

Limitations of Simple ROI

While ROI is an indispensable metric, savvy investors account for its limitations:

  • Excludes Risk: A high ROI in speculative penny stocks carries far greater risk of total capital loss than an 8% ROI from an established S&P 500 fund.
  • Ignores Inflation: Nominal ROI does not adjust for purchasing power erosion over decades. Use our CAGR Calculator and Investment Return Calculator to explore real inflation-adjusted metrics.
  • Tax Consequences: Short-term capital gains face ordinary income tax rates (up to 37%), whereas long-term gains held over 1 year receive favorable 0%, 15%, or 20% federal tax rates.

Frequently Asked Questions About Return on Investment

How do you calculate ROI?
Subtract your total investment costs (initial purchase plus any holding or maintenance expenses) from the final amount returned. Divide that net gain by the total investment costs, then multiply by 100 to express the return as a percentage.
What is considered a good ROI?
A "good" ROI depends on your asset class and risk tolerance. In the public equity markets, an annualized ROI of 8% to 10% (matching the long-term historical S&P 500 average) is widely considered strong. For real estate, an annualized return of 8% to 12% is typical for successful rental properties.
Can ROI be greater than 100%?
Yes. If an investment doubles your money (e.g. you invest $5,000 and return $10,000), your net profit is $5,000 and your ROI is exactly 100%. If you return $15,000 on a $5,000 investment, your net profit is $10,000 and your ROI is 200%.
How do ongoing maintenance costs affect ROI?
Ongoing expenses, management fees, commissions, and property taxes increase your total cost basis. If not accounted for, your calculated ROI will be artificially inflated. Always add these out-of-pocket costs into the "Additional Expenses & Fees" input field for an accurate result.
How does annualized ROI relate to CAGR?
Annualized ROI and Compound Annual Growth Rate (CAGR) use the exact same mathematical formula: `(Ending Value ÷ Beginning Cost)^(1 ÷ Years) − 1`. Both describe the smooth, annual compound rate of return earned on an asset over time.

Related Performance & Investment Calculators

CAGR Calculator →

Calculate Compound Annual Growth Rate to evaluate multi-year portfolio and business growth trajectories.

Stock Profit Calculator →

Calculate net profit, percentage gains, and buying/selling commissions on equity trades.

Investment Return Calculator →

Estimate the future value of investments considering capital appreciation and dividend yields.

Compound Interest Calculator →

See how initial investments and monthly contributions compound exponentially over decades.