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ROI Calculator
An ROI calculator measures how well an investment performed. Enter what you invested, what you got back, and how many years it took, and it shows your return on investment as a percentage, your net profit in dollars, and your annualized ROI — the yearly rate that lets you compare a two-year flip with a ten-year hold on equal terms.
Used for the annualized ROI. Enter the time you held the investment.
| Net profit (or loss) | |
| Annualized ROI | |
| Return multiple |
How it works
Return on investment, or ROI, is the simplest way to judge whether an investment was worth it. It answers one question: for every dollar I put in, how many cents did I get back on top of it? A 30% ROI means you made 30 cents of profit for every dollar invested. A −20% ROI means you lost 20 cents per dollar.
Your amount invested is everything you put in — the purchase price plus any fees, repairs, or other costs. The amount returned is everything you got back, including the sale price and any income the investment paid along the way. Years invested is how long your money was tied up, which matters because a 30% gain in one year is far better than a 30% gain in ten years.
Net profit = Amount returned − Amount invested
Annualized ROI = (Amount returned ÷ Amount invested)1 ÷ years − 1, shown as a percentage.
The annualized ROI is the compound yearly rate that would turn your investment into your return over the same number of years. It is the number to use when comparing investments held for different periods. One warning: ROI ignores risk and timing. A stock that doubled and a rental that doubled had the same ROI, but one may have been a far bumpier ride — and ROI says nothing about the cash flow along the way, so pair it with common sense before you decide.
Worked example
Jordan in Miami, Florida, buys $5,000 of stock in a small company and sells it two years later for $6,500. How good was the investment?
First, the net profit: $6,500 − $5,000 = $1,500. Next, the ROI: $1,500 ÷ $5,000 × 100% = 30%. That is the total return over the two years.
Now the annualized ROI, which spreads the gain evenly across the two years: ($6,500 ÷ $5,000)1 ÷ 2 − 1 = 1.30.5 − 1 = 1.140175 − 1 = 14.02% per year. Notice that 14.02% is not simply 30% ÷ 2 = 15%: compounding means a slightly lower yearly rate still produces the same total, because each year's gains earn gains of their own. For comparison, the same 30% total return stretched over 10 years would be only about 2.66% a year — a useful reminder that time is half the story in any return.
FAQ
What is a good ROI?
It depends on the investment. A good ROI for the US stock market is roughly 7% to 10% a year on average. Rental real estate often targets 8% to 12%, while a small business might aim for 15% or more to cover the extra risk. Compare any ROI against what a safe investment, like a Treasury bond, would pay over the same period.
What is the difference between ROI and annualized ROI?
ROI is the total return over the whole investment, while annualized ROI spreads that return evenly across each year so you can compare investments held for different lengths of time. A 30% ROI over 2 years is about 14% a year, but the same 30% over 10 years is only about 2.7% a year.
Can ROI be negative?
Yes. If you get back less than you put in, the ROI is negative. Invest $5,000 and sell for $4,000, and your ROI is -20%. A negative ROI means the investment lost money.
Should I include extra costs in my ROI?
Yes, for an honest answer. Include every cost: the purchase price, fees, repairs, taxes, and any money you spent keeping the investment going. Likewise, count all the money you got back, including income along the way, not just the final sale price. Leaving costs out makes the ROI look better than it really was.