ROI Calculator

Calculate the return on any investment in seconds. Enter the initial cost and final value to see ROI as a percentage and dollar amount. Add a holding period to see the annualized return (CAGR) for apples-to-apples comparison across investments.

This calculator provides estimates for general informational purposes only and does not constitute financial advice. Consult a qualified financial professional before making any financial decisions.

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Enter your investment cost and return value above to calculate ROI

How It Works

Return on Investment (ROI) measures the gain or loss relative to the initial investment cost:

ROI % = (Final value − Initial cost) / Initial cost × 100
Net profit = Final value − Initial cost

For comparing investments held over different time periods, annualized ROI (Compound Annual Growth Rate, CAGR) is more useful:

CAGR = (Final value / Initial cost)^(1 / years) − 1

CAGR answers: "What constant annual return would produce the same total result?"

Worked examples:

Example 1 (no time period):
Bought stock for $5,000; sold for $7,500.
Net profit = $7,500 − $5,000 = $2,500
ROI = $2,500 / $5,000 × 100 = 50%

Example 2 (with time period — 3 years):
Same investment held 3 years.
CAGR = ($7,500 / $5,000)^(1/3) − 1 = (1.5)^0.333 − 1 = 1.1447 − 1 = 14.47%/year

This means the investment grew at the equivalent of 14.47% per year compounded, making it directly comparable to other investments measured over different periods.

Frequently Asked Questions

What is the difference between ROI and CAGR?

ROI is the total return over the entire holding period. CAGR (Compound Annual Growth Rate) annualizes that return to show the equivalent steady annual rate. CAGR is more useful for comparing investments held for different lengths of time.

Does ROI account for inflation?

Standard ROI is nominal (not inflation-adjusted). To calculate real ROI, adjust the final value to today's dollars using the inflation rate: Real final value = Nominal final value / (1 + inflation rate)^years. The result gives the true increase in purchasing power.

What counts as "cost" in ROI?

Include all costs: purchase price plus commissions, fees, transaction costs, and any ongoing expenses (e.g., maintenance costs on real estate). Total cost of ownership gives a more accurate ROI than purchase price alone.

What ROI is considered good?

It depends on the investment type and risk. The long-term US stock market averages roughly 7–10% per year (nominal). Real estate might average 4–8%. A savings account might return 4–5% currently. Higher returns generally require higher risk. Compare against relevant benchmarks.

Can ROI be negative?

Yes — if the final value is less than the initial investment, ROI is negative. A 50% loss means you would need a 100% gain to recover. This asymmetry (losses hurt more than equal gains help) is why risk management matters.