FinanceCalcs
ROI Calculator
Calculate return on investment, annualized ROI, net profit, and return multiple for any investment or business decision — with optional costs, fees, and additional income.
Works for stocks, real estate, business investments, and any scenario where you want to measure profitability relative to cost.
ROI Statistics
ROI: 0%
- Initial Investment
- Net Profit
"The most important thing to do if you find yourself in a hole is to stop digging."
— Warren Buffett
How ROI is calculated
Return on Investment (ROI) measures the profitability of an investment relative to its cost. The basic formula is: ROI = (Net Profit ÷ Cost of Investment) × 100, where Net Profit equals the final value minus the initial investment — plus any additional income, minus any costs or fees.
Simple ROI does not account for time. A 50% ROI over 2 years is far better than a 50% ROI over 10 years, but the percentage looks identical. Annualized ROI solves this using the CAGR formula — (Final Value ÷ Initial Value)^(1÷Years) − 1 — converting total return into a per-year equivalent that makes investments of different durations directly comparable.
For the most accurate result, include all costs (commissions, taxes, management fees, maintenance) and all returns (dividends, rental income, bonuses) rather than just the top-line figures. Small omissions can significantly distort the true ROI.
lightbulb Example ROI Scenarios
Stock investment: You invest $10,000 in a stock and sell it for $14,200 after 3 years, paying $150 in commissions. Net profit = $4,050. Simple ROI = 40.5%. Annualized ROI = 12.1%/year.
Real estate: You purchase a rental property for $250,000, collect $36,000 in rent over 4 years, spend $14,000 on expenses, and sell for $290,000. Net profit = $62,000. Simple ROI = 24.8%. Annualized ROI = 5.7%/year.
Business decision: A $5,000 marketing campaign generates $18,500 in attributable revenue with $6,200 in associated costs. Net profit = $7,300. ROI = 146% — a strong return by any benchmark.
Comparing annualized ROI across these three scenarios puts them on equal footing, regardless of how long each investment was held.
ROI Calculator FAQs
What is a good ROI?
It depends heavily on the asset class, time horizon, and risk level. A 7–10% annualized ROI is often cited as a reasonable benchmark for a diversified equity portfolio over the long run. Real estate investors typically target 8–12% depending on market and strategy. A business investment or marketing campaign with a 100%+ simple ROI is generally considered strong. The most meaningful comparison is always against a relevant benchmark or your opportunity cost.
What is the difference between simple ROI and annualized ROI?
Simple ROI measures total return as a percentage of cost, regardless of how long the investment was held. Annualized ROI (also called CAGR) converts that total return into an equivalent per-year rate. A 100% simple ROI over 10 years is only about 7.2% annualized — which looks very different and allows fair comparison with other investments of different durations.
Should I include taxes when calculating ROI?
For a true picture of after-tax returns, yes. Taxes — particularly capital gains taxes — can significantly reduce your realized ROI. A 20% return that is subject to a 30% capital gains tax yields an after-tax ROI of only 14%. Including taxes, fees, and transaction costs in your calculation gives a more accurate view of what you actually kept.
How is ROI different from CAGR?
ROI measures total return as a percentage, while CAGR (Compound Annual Growth Rate) expresses that return as an equivalent annual rate assuming compounding. They answer different questions: ROI tells you how much you made overall; CAGR tells you how fast your money grew per year. Annualized ROI and CAGR use the same formula and are often used interchangeably.
ROI terminology
ROI vs. Annualized ROI
Simple ROI is the total return as a percentage of cost, regardless of time held. Annualized ROI converts that total return to a per-year equivalent using the CAGR formula, enabling apples-to-apples comparison across investments held for different durations.
Return Multiple
Final value divided by initial investment. A 2x multiple means you doubled your money; 3x means you tripled it. More intuitive than a percentage for large returns — a 200% ROI and a 3x multiple describe the same result.
Net Profit
Final value minus initial investment, minus any additional costs, plus any additional income. The absolute dollar gain from the investment — the number that most directly answers "how much did I actually make?"
Opportunity Cost
The return forgone by choosing one investment over an alternative. A 5% ROI looks different when the comparable risk-free rate was 4.5% versus 1%. ROI is most meaningful when benchmarked against a relevant alternative.
CAGR (Compound Annual Growth Rate)
The rate at which an investment would have grown each year if it grew at a steady pace. Calculated as (Final Value ÷ Initial Value)^(1÷Years) − 1. Equivalent to annualized ROI and used to smooth out year-to-year volatility in multi-year comparisons.
Disclaimer: All calculators on this site are provided for informational and educational purposes only. Results are estimates based on the inputs you provide and mathematical formulas — they do not account for taxes, fees, inflation, risk, or other real-world factors that may affect financial outcomes. Past performance does not guarantee future results. Nothing on this site constitutes financial, investment, legal, or tax advice. Always consult a qualified professional before making financial decisions.
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