Finance & business
ROI Calculator
Work out the return on any investment. Enter what you put in and what it's now worth to see your net profit and ROI percentage — and add a holding period to get the annualized return so you can compare investments fairly. ROI is the common yardstick American investors and business owners use to size up everything from a stock or rental property to a marketing campaign or a piece of equipment. Because a 30% gain over one year is very different from a 30% gain over five, the annualized figure lets you line up opportunities of different lengths on equal footing. It updates as you type, runs entirely in your browser, and shows the exact formula below.
Investment details
total return over the whole period
ROI ignores the timing of cash flows; the annualized figure assumes the gain compounds steadily over the holding period.
How the ROI calculator works
Return on investment (ROI) measures how much you gained relative to what you put in, as a percentage. A positive ROI means a profit; a negative ROI means a loss. Because plain ROI ignores how long you held the investment, a long-held gain can look better than it really is — that's why the annualized ROI spreads the return evenly across each year so you can compare opportunities of different lengths.
ROI formula
ROI = (final value − initial investment) ÷ initial investment × 100where: initial investment = the cost you paid final value = what the investment is now worth net profit = final value − initial investment
Annualized ROI formula
Annualized ROI = [ (final ÷ initial)^(1 ÷ years) − 1 ] × 100where: years = the holding period (this is the constant yearly rate that compounds to the same total return)
Notes & assumptions
- Enter the final value directly, or switch the dropdown to enter only the amount gained.
- Annualized ROI requires a holding period greater than zero; leave it blank to skip it.
- Does not account for additional contributions, fees, dividends or taxes along the way.
- Calculations are for general information only — verify before relying on them.
Worked example
Suppose you invest $10,000 and three years later it's worth $13,000. Your net profit is $3,000, so your total ROI is 3,000 ÷ 10,000 × 100 = 30%. That sounds strong, but it's spread over three years: the annualized ROI is about 9.14% per year, found by taking the cube root of 1.30 and subtracting one. Compare that to a stock that returned 30% in a single year — an annualized 30% — and you can see why the holding period changes the story entirely. Annualizing is what lets you fairly compare a rental property held for years against a quick flip.
Simple ROI vs annualized ROI
Simple ROI answers one question: how much did this grow in total? Annualized ROI answers a better one: how fast did it grow per year? Take $10,000 that becomes $14,000 over three years. The simple ROI is 4,000 ÷ 10,000 = 40%. The annualized ROI is (1.4)^(1/3) − 1 = 11.87% per year, the steady rate that compounds to the same ending value: 10,000 × 1.1187^3 ≈ 14,000.
Stretch the same 40% total across different holding periods and the yearly picture changes completely:
| Holding period | Total ROI | Annualized ROI |
|---|---|---|
| 1 year | 40% | 40.00% per year |
| 2 years | 40% | 18.32% per year |
| 3 years | 40% | 11.87% per year |
| 5 years | 40% | 6.96% per year |
| 10 years | 40% | 3.42% per year |
Over ten years, that headline 40% shrinks to 3.42% a year, below the U.S. stock market's rough historical average and, in some stretches, barely ahead of inflation. Never judge a multi-year return without annualizing it first.
Worked example: ROI after fees
Costs quietly eat returns, so include them. Suppose you buy $10,000 of an index fund and pay $100 in purchase fees, making your true cost basis $10,100. Three years later you sell for $14,000 and pay $140 in sale fees, leaving net proceeds of $13,860. The headline numbers say 40% ROI. The real numbers say: net profit is 13,860 − 10,100 = $3,760, and net ROI is 3,760 ÷ 10,100 = 37.23%.
Annualized, the gap persists: 11.87% per year before costs becomes (13,860 ÷ 10,100)^(1/3) − 1 = 11.13% per year after them. Just $240 of fees trimmed about 0.74 points off every year's return, and taxes would cut deeper still. For an honest ROI, enter your all-in cost as the initial investment and your after-fee proceeds as the final value, and verify the tax side with your accountant.
ROI or CAGR: which number to quote
The annualized figure this calculator shows is the same thing as CAGR, the compound annual growth rate: both come from (final ÷ initial)^(1 ÷ years) − 1. The difference is what each is for. Total ROI is a lump-sum answer, useful for a single completed deal where you only want the overall gain. CAGR is a rate, and rates are what make comparisons fair: a 40% ROI only beats a 25% ROI if the holding periods match. When you compare a three-year stock gain against a five-year property gain, or either against a savings account quoting a yearly rate, put everything in annualized terms first. One caveat: once you add or withdraw money along the way, CAGR stops telling the whole story and a money-weighted measure such as IRR becomes the right tool.
Frequently asked questions
What is a good ROI?
There's no universal number — it depends on the asset, the risk and the time frame. As a benchmark, the U.S. stock market has historically returned around 7% to 10% a year on average over long periods, so a diversified investment beating that is generally considered solid. A risky venture should be expected to return much more to justify the chance of loss, while a safe asset like a Treasury bond will return far less.
What's the difference between ROI and annualized return?
Plain ROI is the total percentage gain over the entire holding period, ignoring how long that took. Annualized return (sometimes called CAGR) converts that total into a steady yearly rate that compounds to the same result. Annualized return is the fairer measure when you're comparing investments held for different lengths of time — this tool shows both when you enter a holding period.
What's the difference between ROI and ROE?
ROI (return on investment) measures the gain relative to the total amount you put into something. ROE (return on equity) is a corporate metric that measures a company's net income relative to shareholders' equity — essentially how efficiently a business turns its own capital into profit. ROI is broad and works for any investment; ROE is a specific ratio used to evaluate companies.
Does ROI account for fees, taxes and dividends?
Not by default. The basic ROI formula compares only your initial cost to your final value. In the real world, brokerage fees, capital gains taxes, and reinvested dividends all affect your true return. For an accurate picture, use your net proceeds after fees and taxes as the final value, and include any income you received along the way.
Can ROI be negative?
Yes. If your final value is less than your initial investment, your net profit is negative and so is your ROI, signaling a loss. For example, putting in $10,000 and ending with $8,000 is a −20% ROI. A negative ROI is a clear sign the investment lost money over the period measured.
How do I annualize an ROI?
Divide the final value by the initial investment, raise the result to the power of one divided by the years held, then subtract one. For $10,000 that grows to $14,000 over three years, that is (1.4)^(1/3) − 1 = 0.1187, an 11.87% annualized ROI. Enter a holding period in the calculator above and it runs this formula for you.
Is a 40% ROI good?
Only the holding period can tell you. Earned in one year, 40% is exceptional. Spread over ten years it is 3.42% per year, which trails the U.S. stock market's long-run average of roughly 7% to 10% and barely outruns inflation in some periods. Annualize the return first, then compare it against a benchmark with similar risk.