ROI Calculator
Calculate Return on Investment, annualized returns, and compare investments.
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What is ROI?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment. It measures the amount of return on a particular investment, relative to the investment’s cost.
Our calculator offers 3 powerful modes: calculate simple and annualized ROI, compare multiple investments side-by-side to pick the winner, or determine the required returns to hit a specific target ROI.
Whether you are analyzing stocks, real estate, marketing campaigns, or business capital, knowing your ROI is essential for making smart financial decisions.
Annualized ROI
Calculates true yearly growth (CAGR) for long-term accuracy.
Comparison Mode
Compare up to 5 investments to see which performed best.
Target Return
Find out exactly how much you need to earn to hit your goals.
Multi-Currency
Support for USD, GBP, EUR, AUD, CAD, and INR.
ROI Formulas Used
((Returned - Invested) ÷ Invested) × 100
Best for: Short term investments (less than 1 year).
((Returned ÷ Invested)^(1/Years) - 1) × 100
Best for: Multi-year investments to compare true rate.
ROI Analysis Tips
Always use Annualized ROI for investments longer than 1 year.
Consider inflation. A 3% ROI when inflation is 4% is a loss of buying power.
Include transaction fees (commissions, maintenance) in your 'Invested' amount.
Remember taxes. Deduct capital gains tax from returns for a net ROI.
Limitations of ROI
Ignores Risk: High ROI often comes with high risk. ROI alone doesn't show volatility.
Time Blindness: Simple ROI doesn't account for how long it took to earn the money (use Annualized).
Cash Flow: It doesn't tell you the timing of cash flows, just start vs end.
Frequently Asked Questions
What is ROI (Return on Investment)?
ROI is a profitability metric used to evaluate how well an investment has performed. It is expressed as a percentage of the initial cost. Formula: (Net Profit / Cost of Investment) × 100.
What is Annualized ROI vs Simple ROI?
Simple ROI shows total growth, regardless of time (e.g., 50% over 5 years). Annualized ROI shows the yearly growth rate (CAGR) needed to achieve that result (e.g., 8.45% per year). Annualized is better for comparing investments of different durations.
How do I calculate ROI?
Formula: ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. Example: Invest $1,000, return $1,200. Gain is $200. ROI = (200 / 1000) × 100 = 20%.
What is a good ROI?
It depends on the risk and asset class. S&P 500 historically returns ~10% annually. High-risk start-ups might target >50%. Real estate might aim for 8-12% + appreciation. A 'good' ROI always beats inflation and justifies the risk taken.
Does this calculator include time?
Yes, if you enter an 'Investment Period', we calculate the Annualized ROI. This is crucial because a 20% return over 1 year is much better than a 20% return over 10 years.
Can ROI be negative?
Yes. If your final value is less than your initial investment, you have a negative ROI, meaning you lost money. Example: Invest $100, return $80. Loss $20. ROI = -20%.
How do I calculate CAGR?
Compound Annual Growth Rate (CAGR) is the same as Annualized ROI in our calculator. Formula: (Ending Value / Beginning Value)^(1/n) - 1, where n is number of years.
What is the difference between ROI and profit margin?
ROI measures return on invested capital. Profit margin measures return on sales/revenue. ROI tells investors how efficient their money is; margin tells business owners how efficient their operations are.
Should I include taxes in ROI?
For a true 'net' ROI, yes, you should deduct taxes and fees from the 'Amount Returned'. Gross ROI ignores these but is useful for comparing raw investment performance.
How can I compare two investments?
Use the 'Compare Investments' mode in our calculator. Enter the details for multiple assets side-by-side. Always look at the Annualized ROI to compare fair apples-to-apples performance if time periods differ.