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ROI Calculator
Calculate your return on investment (ROI) and annualized ROI for any asset or investment.
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ROI %
Net Profit ($)
Annualized ROI (%)
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How to Use This Calculator
Enter your initial investment amount — the total you put in, including any fees or purchase costs. Then enter the final value — what your investment is worth now or what you sold it for. Optionally, enter the time period in years to see your annualized ROI (also known as CAGR). The results update instantly. ROI shows the total percentage gain or loss, Net Profit shows the dollar amount gained or lost, and Annualized ROI shows the equivalent yearly return rate assuming compounding.
ROI Formula
ROI is calculated as: ROI = ((Final Value − Initial Investment) / Initial Investment) × 100. For example, investing $10,000 and ending with $15,000 gives ROI = ($5,000 / $10,000) × 100 = 50%. Annualized ROI accounts for the time period: Annualized ROI = ((1 + ROI/100)^(1/years) − 1) × 100. That same 50% ROI over 5 years gives an annualized ROI of (1.5^0.2 − 1) × 100 ≈ 8.45% per year. If your final value is less than your initial investment, ROI will be negative, indicating a loss.
Example Calculation
Suppose you invested $10,000 in a stock portfolio and it grew to $18,500 over 7 years. Your net profit is $8,500. ROI = ($8,500 / $10,000) × 100 = 85%. Annualized ROI = (1.85^(1/7) − 1) × 100 ≈ 9.19% per year — beating the historical S&P 500 average. Conversely, if you invested $10,000 and it dropped to $7,500, your ROI would be −25%, meaning you lost 25% of your initial investment.
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Frequently Asked Questions
What is a good ROI?
A 'good' ROI depends heavily on the type of investment and risk involved. For the stock market, a 7–10% annual return is often considered a benchmark based on long-term historical averages. Real estate investors often target 8–12% annual returns. Higher-risk investments like startups may need 20%+ ROI to justify the risk. Compare your ROI against similar investments and consider risk-adjusted returns, not just raw percentages.
What is the difference between ROI and CAGR?
ROI (Return on Investment) measures the total percentage gain or loss relative to your initial investment, without accounting for time. CAGR (Compound Annual Growth Rate) is the annualized version — it tells you the consistent yearly rate that would produce the same total return over the holding period. For example, a 50% total ROI over 5 years equals a CAGR of about 8.45%. Use ROI for a quick snapshot; use CAGR to compare investments held for different time periods.
How do I calculate annualized ROI?
Annualized ROI uses this formula: Annualized ROI = ((1 + ROI/100)^(1/years) − 1) × 100. For example, a 100% total ROI over 5 years gives an annualized ROI of (2^(1/5) − 1) × 100 ≈ 14.87% per year. This calculator computes it automatically when you enter the time period in years. Note that annualized ROI assumes compounding — it's equivalent to CAGR.
What costs should I include when calculating ROI?
For a true ROI, your initial investment should include all costs: purchase price, transaction fees, commissions, closing costs, renovation expenses, and any ongoing costs capitalized into the investment. Your final value should reflect what you actually receive after selling fees, taxes, and other exit costs. Including all costs gives a realistic picture of your actual return rather than a best-case scenario.
What is the difference between ROI and NPV?
ROI measures the percentage return relative to your initial investment, ignoring the time value of money. NPV (Net Present Value) discounts future cash flows back to present value using a required rate of return, telling you the dollar value added or destroyed by an investment. ROI is simple and useful for comparing investments of similar duration; NPV is better for evaluating multi-year projects with irregular cash flows, as it accounts for the fact that money today is worth more than money in the future.
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