Return on Investment (ROI) Calculator

Return on Investment

50%

The Numbers

  • Net profit: $5,000.00

Annualized

  • Annualized return: 14.47% per year

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Includes your inputs and results for this calculation, plus any additional calculations you've compared.

Disclaimer

This calculator provides estimates for informational purposes only and does not constitute financial, medical, legal, or tax advice. Always consult a qualified professional about your specific situation.

How This Calculator Works

Return on investment (ROI) measures how much an investment gained or lost, as a percentage of what you originally put in. Enter what you invested and what it’s worth now (or what you sold it for), and this calculator shows your total percentage return, your net profit in dollars, and — if you enter how long you held it — that same return expressed as a yearly rate, so investments held for different lengths of time can be compared fairly.

This is deliberately the simple, single-investment version: it assumes one lump sum in and one lump sum out. The Compound Interest Calculator instead projects a balance forward under an assumed growth rate, and a full multi-cash-flow analysis (money going in and out at different times) needs a more involved tool than this one.

The Formula

ROI:

ROI=Final ValueInitial InvestmentInitial Investment×100\text{ROI} = \frac{\vA{\text{Final Value}} - \vB{\text{Initial Investment}}}{\vB{\text{Initial Investment}}} \times 100

Annualized ROI (CAGR):

CAGR=[(Final ValueInitial Investment)12÷Months Held1]×100\text{CAGR} = \left[\left(\frac{\vA{\text{Final Value}}}{\vB{\text{Initial Investment}}}\right)^{12 \div \vC{\text{Months Held}}} - 1\right] \times 100

The steady yearly rate that would turn your initial investment into the final value over exactly that many months, letting you compare a 6-month investment against a 3-year one on equal footing.

Worked Example

Investing $10,000, now worth $15,000, held for 36 months (3 years):

  1. Net Profit: 15,00010,000=5,000\vA{15{,}000} - \vB{10{,}000} = \vD{5{,}000} dollars.
  2. ROI: 5,000÷10,000×100=50%\vD{5{,}000} \div \vB{10{,}000} \times 100 = 50\%.
  3. Annualized ROI: (15,000÷10,000)12÷36114.47%(\vA{15{,}000} \div \vB{10{,}000})^{12 \div \vC{36}} - 1 \approx 14.47\% per year.

A 50% total return sounds identical whether it took 6 months or 6 years — the annualized figure is what actually lets you compare the two.

Source: Standard ROI and CAGR (compound annual growth rate) formulas.

Frequently Asked Questions

What is a good ROI?

It depends heavily on the investment type, risk level, and time horizon — there's no single universal benchmark. A savings account and a small business venture have very different reasonable ROI expectations. Comparing an investment's annualized ROI against a relevant benchmark (like a broad stock market index over the same period) is usually more meaningful than judging the raw percentage alone.

Why does the annualized return differ so much from the total ROI?

Total ROI is the whole-period return with no regard for how long it took. Annualized ROI (CAGR) spreads that same return evenly across each year, compounding — so a 50% return over just 6 months annualizes to a much higher rate than a 50% return over 6 years, even though the total dollar profit could be identical.

Does this account for fees, taxes, or dividends?

No — this calculator compares a starting value to an ending value directly. If you received dividends or other income along the way, add that to the final value first. Fees and taxes reduce your real-world return but aren't subtracted automatically here, since they vary widely by account type and situation.