ROI Calculator — Return on Investment

Initial Investment ($)

Total Return ($)

Time Period (years)

Full breakdown (click to copy)

Decision Support

Compare Annualised ROI against alternatives

A high total ROI over many years can still be a mediocre annual return — the Annualised ROI figure is the fair way to compare this investment against other opportunities.

Check the Comparison table for consistency

If the annualised return changes dramatically across different time periods, the underlying growth wasn't steady — investigate what drove the difference before treating any single figure as representative.

A negative ROI needs a plan, not just a number

If Net Profit/Loss is negative, decide explicitly whether to hold, exit, or average down — don't let the calculator's output substitute for an actual decision.

➜ Next step: Evaluating a trading account specifically? Use the Funded Account ROI Calculator or the Solar Panel ROI Calculator for asset-specific analysis.

How to Use the ROI Calculator

Enter initial investment — the total amount invested including purchase price, fees, and any setup costs.
Enter total return — the final value of the investment including any income received (dividends, rent, interest).
Set time period — the number of years the investment was held. Used to calculate annualised ROI.
Read ROI percentage — total return as a percentage of initial investment.
Compare annualised ROI — allows fair comparison between investments held for different periods.

📊 ROI vs Annualised ROI: A 50% ROI over 5 years sounds impressive but is only 8.4% annualised. A 20% ROI over 1 year is 20% annualised — significantly better. Always compare investments using annualised ROI (CAGR) rather than total ROI to account for time differences.

Understanding Return on Investment

📐 Basic ROI Formula

ROI = (Net Profit ÷ Initial Investment) × 100. Net Profit = Final Value − Initial Investment. A $10,000 investment that grows to $14,000: ROI = ($4,000 ÷ $10,000) × 100 = 40%.

📈 Annualised ROI (CAGR)

CAGR = (Final Value ÷ Initial Value)^(1÷Years) − 1. Converts total return to equivalent annual return. Allows fair comparison between investments held for different time periods.

⚖️ What Is Good ROI?

Depends entirely on asset class and risk: savings account 3–5%, bonds 4–7%, real estate 8–12%, stock market 7–10% long-term average, business investment 15–30%, venture capital 20%+. Higher ROI always comes with higher risk.

💸 ROI Including Costs

Always include ALL costs in investment calculation: purchase fees, management fees, maintenance costs, taxes on gains, transaction costs. Gross ROI before fees often looks excellent; net ROI after all costs reveals the true return.

🔄 Return Multiple

Alternative to percentage: Return Multiple = Final Value ÷ Initial Investment. 2× = doubled money. 5× = 5 times initial investment. Common in venture capital and private equity where percentages become unwieldy for large multiples.

📊 Opportunity Cost

ROI must always be compared to the next best alternative (opportunity cost). A 6% ROI on a risky investment is poor if a risk-free government bond offers 5%. A 6% ROI from an index fund is excellent compared to leaving cash in a 0.5% savings account.

Applying ROI Analysis

Business investment decisions

ROI analysis guides every major business expenditure. Hiring a salesperson: $80,000 salary investment, expected $200,000 additional revenue at 40% margin = $80,000 net profit = 100% ROI. Purchasing equipment: $50,000 investment, $15,000 annual labor savings = 3.3-year payback, 30% annual ROI. The discipline of calculating expected ROI before spending — and comparing actual to expected after — is the foundation of profitable business management.

Marketing ROI

Marketing ROI = (Revenue attributed to marketing − Marketing cost) ÷ Marketing cost × 100. A $5,000 Google Ads campaign generating $20,000 in revenue at 50% margin = $10,000 profit − $5,000 cost = $5,000 net = 100% ROI. Tracking marketing ROI by channel reveals which activities deserve more budget and which should be cut. Most businesses find 80% of marketing ROI comes from 20% of channels.

Real estate ROI

Real estate ROI includes both rental yield and capital appreciation. Rental yield = Annual Rent ÷ Property Value × 100. A $300,000 property renting for $2,000/month: $24,000/year ÷ $300,000 = 8% gross yield. Subtract mortgage interest, property tax, maintenance, and management fees to find net yield — typically 3–5% after costs. Add capital appreciation for total ROI.

📊 ROI decision framework: Calculate ROI for every significant financial decision. If ROI is below your threshold (e.g. 10% minimum), decline or renegotiate. If above threshold, proceed but track actual vs projected ROI. Over time, this discipline produces significantly better financial outcomes than intuition-based decisions.

ROI Formula

ROI = (Net Profit ÷ Investment) × 100, where Net Profit = Total Return − Investment. Annualised ROI = ((Total Return ÷ Investment)^(1 ÷ Years) − 1) × 100.

Worked example

$10,000 invested, $15,000 returned after 3 years: Net Profit = $15,000 − $10,000 = $5,000. ROI = (5,000 ÷ 10,000) × 100 = 50%. Annualised ROI = ((15,000 ÷ 10,000)^(1/3) − 1) × 100 = 14.47%/year — the fair comparison figure against a savings account or another investment's annual return.

Assumption: Total Return must be the actual dollar amount received back, not additional profit alone — entering only the profit figure will overstate the ROI.

Common Mistakes

Entering profit instead of total return

"Total Return" means the full amount received back (principal + gain), not just the profit portion — entering profit alone will double-count and overstate the ROI.

Comparing ROI across different time periods directly

A 50% ROI over 1 year is far better than 50% over 10 years — always compare Annualised ROI, not raw ROI, when time periods differ.

Ignoring fees, taxes, and inflation

This calculator computes raw ROI on the numbers entered — transaction costs, taxes on gains, and inflation all reduce the real return below the headline figure.

Treating a short backtest as a reliable annualised rate

A strong return over a few months, projected forward at the same rate for a year, usually overstates what's actually achievable — short periods have more variance than they appear to.

Frequently Asked Questions

What is ROI?

Return on Investment (ROI) = (Net Profit / Investment Cost) × 100. A 50% ROI means you made 50 cents for every dollar invested. ROI doesn't account for time — a 50% ROI in 1 year is much better than 50% over 10 years.

What is annualised ROI?

Annualised ROI (CAGR) accounts for time by calculating the equivalent yearly return. Formula: ((Final Value / Initial Value) ^ (1/years) - 1) × 100. This allows fair comparison between investments of different durations.

What is a good ROI?

It depends on the investment type. Stock market average: 7-10%/year. Real estate: 8-12%/year. Savings account: 2-5%. Startup investment: 20%+. Always compare ROI to the risk taken — a higher ROI investment typically carries more risk.

References

🏛️ U.S. Securities and Exchange Commission

Investment return disclosure standards — sec.gov

📄 Your brokerage statement

For exact realised returns, use the total return figure from your official account statement rather than an estimate.

Last updated: 13 July 2026 · ROI figures shown are before fees, taxes, and inflation unless you factor them into your inputs.