ROI Calculator - Return On Investment

1. Enter the initial investment, including any purchase costs.
2. Enter the final value, what it is worth now or what you sold it for.
3. Optionally enter the holding period in years to see the annualized return.
4. Read your ROI, the net profit or loss, and the annualized return.

Here is what each result means:

Return on investment, or ROI, is a simple ratio that shows how much an investment gained or lost relative to its cost, expressed as a percentage. A positive ROI means a profit and a negative ROI means a loss, which makes it an easy way to compare very different investments on the same scale.

It is widely used for stocks, property, business projects and marketing spend. Because basic ROI ignores how long you held the investment, the annualized return is often more useful for comparing opportunities, and neither figure includes tax, fees or inflation.

It compares what you got back with what you put in, then scales the difference to a percentage. With a holding period, it also converts that total return into a yearly rate.

1. Subtract the initial investment from the final value to get the net profit or loss.
2. Divide by the initial investment and multiply by 100 for the ROI percentage.
3. For the annualized return, apply (Final / Initial)^(1 / years) - 1 and express it as a percentage.

Suppose you invest 1,000 and it grows to 2,000 over 3 years.

Calculation: net profit = 2,000 - 1,000 = 1,000. ROI = 1,000 / 1,000 x 100 = 100%.

The annualized return = (2,000 / 1,000)^(1/3) - 1 = about 26% a year. That yearly figure lets you compare this against an investment that returned, say, 40 percent over five years.

ROI depends on more than the headline gain, so read it with these in mind.

Costs Included in the Initial Amount

Fees, commissions and improvements are part of your true cost. Leaving them out overstates your ROI.

Holding Period

A 50 percent return in one year is very different from 50 percent over ten years. Use the annualized return to compare fairly.

Tax and Inflation

Taxes reduce your actual gain, and inflation reduces its buying power. A nominal ROI can look better than the real, after-tax result.

These three figures answer different questions and are best read together.

A high ROI over a long period can annualize to a modest yearly rate, so always check both. For business margins, use the margin calculator, or the markup calculator for cost-based pricing.

Comparing Investments

Put stocks, property and side projects on the same percentage scale to see which performed best.

Evaluating a Project or Campaign

Marketing and business use ROI to judge whether the return justified the spend.

Reviewing Your Own Results

Check what an investment actually returned after you sell, and use the annualized figure to compare it to a savings rate. Track profit on a sale with the profit calculator.

1. Ignoring the Holding Period

A raw ROI without a time frame can mislead. Two investments with the same ROI can have very different yearly returns.

2. Leaving Out Costs

Fees, taxes and commissions belong in the initial amount or netted from the final value, or the ROI is overstated.

3. Confusing ROI with Profit

ROI is a percentage; profit is an amount. A large profit on a huge investment can still be a small ROI.

4. Comparing Nominal to Real Returns

Compare like with like. If one figure is after inflation, the other should be too.

5. Annualizing a Loss Incorrectly

Annualized return needs a positive final value to be meaningful. Read a total loss as a percentage instead.

The arithmetic is exact for the figures you enter, but ROI is only as complete as those inputs.

ROI is not a single number but a family of them, and knowing which one you are looking at prevents most misunderstandings.

Simple ROI is the headline figure: total gain divided by cost, ignoring time. It is quick but can flatter a long, slow investment. Annualized ROI converts that total into an equivalent yearly rate, which is the only fair way to compare investments held for different lengths of time. Real ROI goes a step further and strips out inflation, showing the growth in actual buying power rather than in nominal money. An investment that returned 6 percent in a year when inflation ran at 4 percent delivered only about 2 percent real ROI.

For any serious comparison, annualized ROI is the minimum you should use, and real ROI is worth calculating whenever inflation is high or the holding period is long.

Because ROI is gain over cost, you improve it by lifting the numerator, cutting the denominator, or shortening the time over which the return is earned.

Reduce Your Costs

Fees, commissions and taxes quietly erode returns. Lower-cost funds, tax-efficient accounts and fewer transactions can raise net ROI without taking on any extra risk.

Increase the Return

Higher returns usually mean higher risk, so this lever must be pulled carefully. Reinvesting income to compound, or improving an asset before selling, can raise the gain more safely than simply chasing volatile bets.

Mind the Time

The same total return earned faster is a higher annualized ROI. This is why holding periods and reinvestment matter as much as the raw gain, and why patience and compounding are so powerful over long horizons.

The biggest weakness of ROI is that it says nothing about risk. Two investments can both show a 20 percent return while being wildly different bets, one a steady bond ladder and the other a single speculative stock that could equally have lost half its value.

A high ROI earned by taking enormous risk is not obviously better than a modest ROI earned safely, because the risky bet carries a real chance of a large loss that the headline number never shows. Sensible investors read ROI alongside some sense of the risk taken to earn it, whether that is the volatility of the asset, the chance of total loss, or simply how diversified the position was. Comparing the ROI of a diversified portfolio with that of a lottery-like single bet is comparing two different things.

In short, ROI answers how much you made, not how much you risked to make it, and both questions matter.

Beyond investing, ROI is the language of business decisions, and marketing is where it shows up most often, sometimes under the name ROAS, or return on ad spend.

The idea is identical: treat the campaign cost as the investment and the revenue or profit it generated as the return. A campaign that cost 2,000 and produced 6,000 in attributable revenue has a simple ROI of 200 percent, or a 3-to-1 return on spend. The complications are practical rather than mathematical: attributing sales to the right campaign, deciding whether to measure against revenue or profit, and accounting for the lifetime value of a customer rather than a single purchase. Used carefully, marketing ROI tells you which channels earn their keep and which quietly drain the budget.

Whatever the context, keep the definition consistent. Comparing a revenue-based ROI in one channel with a profit-based ROI in another leads straight to bad decisions.

The same formula applies everywhere, but the inputs look different depending on what you are measuring.

A Stock

You buy 100 shares at 20, a 2,000 investment, and sell later at 26, receiving 2,600. ROI is (2,600 - 2,000) / 2,000, which is 30 percent. Add any dividends to the final value and any trading fees to the cost for a truer figure.

A Rental Property

You put 50,000 of your own money in and, after a year, have earned 4,000 in rent net of costs and the property is worth 6,000 more. The one-year ROI on your cash is (4,000 + 6,000) / 50,000, which is 20 percent, though property returns are harder to realise than share gains.

A Business Project

A 10,000 software investment saves 15,000 in labour over two years. ROI is (15,000 - 10,000) / 10,000, which is 50 percent total, or roughly 22 percent annualized once you account for the two-year span.

For simple, one-in one-out situations, ROI is ideal. When money flows in and out at several points in time, professionals reach for two related tools.

ROI is the accessible starting point that everyone understands. IRR and NPV add the time value of money for more complex decisions, which is the one thing simple ROI leaves out.

A pound today is worth more than a pound next year, because today money can be invested to grow, and because inflation erodes future money. This principle, the time value of money, is the hidden assumption behind why annualized ROI beats simple ROI for comparison.

It is why a 50 percent return over one year is far more impressive than the same 50 percent over ten. In the first case your money nearly doubles in annual terms once compounded; in the second it crawls along at roughly 4 percent a year. Whenever you compare investments, mentally convert to an annual rate first, and be suspicious of any headline percentage quoted without a time frame attached.

Subtract the initial investment from the final value to get the net gain, divide by the initial investment, then multiply by 100. For example, a 1,000 investment worth 2,000 has an ROI of (2,000 - 1,000) / 1,000 x 100 = 100 percent.

It depends on the investment, the risk and the time frame. Broad stock market returns have historically averaged roughly 7 to 10 percent a year before inflation, so compare your annualized return against a relevant benchmark rather than a fixed number.

ROI is the total percentage gain over the whole period, while the annualized return converts it to an equivalent yearly rate. Annualized return lets you compare investments held for different lengths of time.

Yes. If the final value is less than the initial investment, the ROI is negative, which represents a loss. A final value of zero would be a 100 percent loss.

Not by default. To reflect them, add fees to your initial cost and subtract taxes from your final value. Otherwise the ROI shows the gross, pre-tax return.

Use the formula (Final value / Initial investment) raised to the power of 1 divided by the number of years, minus 1, then multiply by 100. This calculator does it automatically when you enter a holding period.

No. Profit is the gain in money, while ROI expresses that gain as a percentage of what you invested. A large profit can still be a small ROI if the investment was large.

Yes. Treat the campaign spend as the initial investment and the revenue or value generated as the final value. The result shows whether the campaign returned more than it cost, sometimes called return on ad spend or ROAS.

No, and this is its biggest limitation. Two investments with the same ROI can carry very different risk. A high return earned through a risky bet is not automatically better than a modest one earned safely, so read ROI alongside the risk taken to earn it.

Real ROI is your return after subtracting inflation, so it reflects growth in actual buying power rather than nominal money. If you earned 6 percent while inflation was 4 percent, your real ROI was about 2 percent.

ROI gives the total percentage gain for a simple, single-period investment. IRR, the internal rate of return, is an annual rate used when money flows in and out at several points in time, accounting for the timing of each cash flow.

No. The calculation runs entirely in your browser and nothing you enter is stored or sent anywhere unless you choose to Save a result, which stays only in this browser.

• Return on investment (ROI) explained (Corporate Finance Institute).
• Compound interest and returns (US SEC Investor.gov).
• Return on investment (ROI) glossary (US SEC Investor.gov).