ROI Calculator
Calculate return on investment percentage, annualized ROI, and compare investments side-by-side.
Results
Return on Investment
+25.00%
Profit of $2,500.00
Investment
$10,000.00
Return
$12,500.00
Profit/Loss
+$2,500.00
ROI Ratio
1.25x
Simple ROI Formula
ROI = (Gain - Cost) / Cost x 100
Gain = Return Amount, Cost = Investment Amount
Understanding ROI Calculations
Simple ROI
ROI = (Gain - Cost) / Cost x 100
Measures the total percentage return on an investment. A 25% ROI means you earned 25 cents for every dollar invested. Simple but does not account for time.
Annualized ROI
AROI = ((FV/IV)^(1/n) - 1) x 100
Converts total return to a yearly rate for fair comparison. A 50% return over 5 years equals about 8.4% annually, accounting for compound growth.
Frequently Asked Questions
ROI (Return on Investment) measures the profitability of an investment as a percentage. The formula is: ROI = (Gain - Cost) / Cost x 100. For example, if you invest $1,000 and receive $1,200 back, your ROI is ($1,200 - $1,000) / $1,000 x 100 = 20%.
Annualized ROI converts the total return to a yearly rate, allowing fair comparison of investments held for different time periods. The formula is: Annualized ROI = ((Final Value / Initial Value)^(1/years) - 1) x 100. This accounts for compound growth over time and is essential for comparing investments of different durations.
A "good" ROI depends on the investment type and risk level. Stock market historically averages 7-10% annually, real estate 8-12%, and savings accounts 1-5%. Higher-risk investments should offer higher potential returns to compensate for the added risk. Always compare ROI against the risk-free rate and similar investment opportunities.
Annualized ROI provides an apples-to-apples comparison. A 50% return over 5 years (about 8.4% annually) is actually worse than a 30% return over 2 years (about 14% annually) because your money grows faster with the higher annual rate. Annualized ROI normalizes returns to a common time frame for accurate comparison.