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ROI Calculator: Return on Investment
Find the total and annualized return on a stock, property, business or any other investment.
The ROI formula
ROI = (Final value − Cost) ÷ Cost × 100%
Include everything you paid in the cost (fees, commissions, repairs) and everything you received in the final value (sale price, dividends, rent). Leaving out costs makes ROI look better than it was.
Annualized ROI (CAGR)
Total ROI ignores time: a 50% gain in 2 years is much better than 50% in 10 years. The annualized return fixes that: CAGR = (Final ÷ Cost)1/years − 1.
Example
You invest $10,000 and sell four years later for $15,000. Profit is $5,000, so total ROI is 50%. Annualized, that is 1.51/4 − 1 = 10.67% a year. Simply dividing 50% by 4 (12.5%) overstates it because it ignores compounding.
Things ROI leaves out
- Risk. Two investments with the same ROI can have very different chances of losing money.
- Inflation. Subtract inflation for the real return; see the inflation calculator.
- Taxes. Gains held over a year are usually taxed at lower long-term capital gains rates.
- Cash flows in between. If you added or withdrew money along the way, use an internal rate of return (IRR) instead.
Frequently asked questions
How do you calculate ROI?
ROI = (amount returned − amount invested) ÷ amount invested × 100. Investing $10,000 and getting back $15,000 is a $5,000 gain, or a 50% ROI.
What is annualized ROI?
It is the steady yearly return that would produce the same result, also called CAGR. A 50% gain over 4 years is about 10.7% a year, not 12.5%, because returns compound.
What is a good ROI?
It depends on risk. US stocks have averaged roughly 10% a year before inflation over the long run; safe savings currently pay around 4%. Compare annualized returns, not total returns, when the holding periods differ.