ROI Calculator
Total and annualized return on any investment.
Calculate return on investment (ROI) from an initial and final value, plus an annualized rate so returns over different time periods can be compared fairly.
The ROI formulas
- Total ROI = (final value − initial investment) ÷ initial investment × 100
- Annualized ROI = (final value ÷ initial investment)1 ÷ years − 1, shown as a yearly percentage
Total ROI tells you how much you gained overall. Annualized ROI tells you the steady yearly rate that would produce the same result, which is what you need to compare investments held for different lengths of time.
Examples
| Invested | Worth now | Years | Total ROI | Annualized |
|---|---|---|---|---|
| $10,000 | $15,000 | 3 | +50.00% | +14.47% / yr |
| $10,000 | $15,000 | 10 | +50.00% | +4.14% / yr |
| $5,000 | $6,000 | 1 | +20.00% | +20.00% / yr |
| $250,000 | $400,000 | 8 | +60.00% | +6.05% / yr |
| $20,000 | $16,000 | 2 | −20.00% | −10.56% / yr |
The first two rows show why annualizing matters: the same 50% gain is excellent over 3 years but modest over 10.
Using ROI for business decisions
ROI isn't only for stocks. You can use it to judge a marketing campaign (revenue it brought in versus what it cost), new equipment (savings versus price), or a home improvement (added value versus cost). In each case, count every cost honestly — including your own time, if it matters — so the number reflects the real return.
Frequently asked questions
What is ROI?
Return on Investment: (final value − initial investment) ÷ initial investment × 100 — the total percentage gain or loss on what you put in.
Why does annualized ROI matter?
A 50% return sounds great, but it means something very different over 1 year versus 10 years. Annualized ROI converts the total return into an equivalent yearly rate, so returns over different time periods can be compared fairly.
What is a good ROI?
It depends on the risk and the alternatives. A useful habit is to compare an investment's annualized ROI with what you could earn with less risk, such as a high-yield savings account or bonds, and ask whether the extra return is worth the extra risk.
Should I include costs and fees?
Yes. Add purchase costs, commissions, fees and maintenance to the initial investment (or subtract them from the final value) so the ROI reflects what you actually earned.
Why is a 20% loss followed by a 20% gain not break-even?
Percentages apply to different amounts. $10,000 down 20% is $8,000, and 20% of $8,000 is only $1,600, leaving you at $9,600. A loss needs a bigger percentage gain to recover.