ROI Calculator
Measure your return on any investment, instantly. See profit, ROI %, annualized gains, and more in a single click.
Years
📐 ROI Formula Used
ROI (%) = (Net Profit ÷ Cost of Investment) × 100
— equivalent forms —
ROI (%) = [(Final Value − Initial Investment − Costs) ÷ (Initial Investment + Costs)] × 100
Net Profit = Final Value − Initial Investment − Costs
Net Profit = what you gained (or lost) after everything is accounted for. Cost of Investment = every dollar you put in: the initial amount plus all additional costs. This calculator also computes Annualized ROI: Annualized ROI (%) = [(1 + ROI÷100) ^ (1÷Years)] − 1 × 100. Duration is converted to years for annualized ROI. Months ÷ 12, Days ÷ 365.
💡 What is ROI?
Return on investment (ROI) is a profitability ratio that measures the profit an investment generated relative to its cost. It is expressed as a percentage: ROI = (Net Profit ÷ Cost of Investment) × 100. A positive ROI means the investment gained money; a negative ROI means it lost money.
ROI is one of the most widely used performance metrics in finance because it reduces any investment — stocks, real estate, a business project, a marketing campaign — to a single comparable number. It compares the net profit to the initial cost, expressed as a percentage. ROI does not account for the time value of money — that’s where Annualized ROI helps, letting you compare investments of different durations fairly.
⚡ ROI in 30 Seconds
What it is: ROI tells you how much profit you made for every dollar you invested, as a percentage.
The formula: ROI = (Net Profit ÷ Cost) × 100. Invest $10,000, end with $12,500 → profit $2,500 → 25% ROI.
What counts as good? At minimum, beat long-run inflation (~3% per year). For US stocks, ~7–10% annualized is historically good. Above 20% is excellent; below 0% is a loss.
The catch: plain ROI ignores time. A 50% gain over 1 year and over 10 years are very different investments — always compare using annualized ROI below.
🧮 How to Calculate ROI — Worked Examples
Example 1 — basic. You invest $10,000 and later sell for $12,500.
Net profit = $12,500 − $10,000 = $2,500
ROI = $2,500 ÷ $10,000 × 100 = 25%
Example 2 — including costs. You invest $10,000, pay $200 in brokerage fees, and sell for $14,000.
Total cost = $10,000 + $200 = $10,200 | Net profit = $14,000 − $10,200 = $3,800
ROI = $3,800 ÷ $10,200 × 100 = 37.3%
The second example is the realistic one: the same sale price with $200 of costs gives 37.3%, not 40%. Leave costs out and ROI always looks better than it is — the single most common ROI mistake.
📅 Annualized ROI (CAGR)
Annualized ROI — the same thing as CAGR (Compound Annual Growth Rate) — converts a total return into an equivalent yearly rate, so investments held for different periods can be compared fairly:
Annualized ROI = ((1 + ROI) ^ (1 ÷ years)) − 1, or equivalently ((Final Value ÷ Cost) ^ (1 ÷ n)) − 1, where n is the number of years.
Worked comparison. Investment A returns 50% over 5 years: (1.50)^(1÷5) − 1 = 8.45% per year. Investment B returns 30% over 3 years: (1.30)^(1÷3) − 1 = 9.14% per year. B wins, even though its total ROI is lower.
Time changes everything. A 100% total ROI over 10 years is only ~7.2% per year; the same 100% over 2 years is ~41.4% per year. Total ROI without a time dimension is misleading — always annualize before comparing.
🏆 What Is a Good ROI? Benchmarks by Asset Class
A “good” ROI is always relative to what else you could have earned. Here are widely cited US benchmarks, sourced so you can trust them — not just numbers on a page:
| Asset class | Typical annualized return | Source / benchmark |
|---|---|---|
| US stocks (S&P 500) | ~10% nominal, ~7% after inflation | Long-run data per NYU Stern / Slickcharts |
| Real estate | 8–12% | Market-dependent; varies widely by location |
| Bonds | 3–5% | Historical long-term averages |
| High-yield savings | 4–5% | Current rate environment (moves with Fed rates) |
| Small business | 15–25%+ | Target range for successful small businesses |
| Inflation (hurdle rate) | ~3% per year | US Federal Reserve / Bureau of Labor Statistics |
Quick rating guide: above 20% → excellent | 10–20% → good | 5–10% → fair | 0–5% → low | below 0% → loss.
Two rules of thumb: (1) any annualized return above the ~3% long-term inflation rate is real wealth growth; below it, purchasing power shrinks. (2) Higher expected returns demand higher risk — a “good” 8% from diversified stocks is not the same as 8% from a speculative bet.
🧾 After-Tax ROI
The ROI that matters is the one you keep. In the US, investment gains are taxed differently depending on how long you held the asset:
Short-term capital gains (held under 1 year) → taxed as ordinary income: 10%–37%.
Long-term capital gains (held over 1 year) → taxed at 0%, 15%, or 20%, depending on income.
After-tax ROI = ROI × (1 − tax rate). Worked example: a 30% ROI taxed at the 20% long-term rate becomes 30% × 0.80 = 24% after tax.
Tax rules vary by country — outside the US, check your local capital-gains rates — but the principle is universal: always judge an investment on its after-tax return.
🏠 ROI for Real Estate
Rental property is where ROI is most often miscalculated, because investors forget half the costs. Include all of these: purchase price, closing costs, property taxes, insurance, maintenance and repairs, management fees, and a vacancy allowance.
Worked example. You buy a rental for $200,000 and collect $1,500/month ($18,000/year). Annual costs: taxes $3,000 + insurance $1,200 + maintenance $1,800 + 5% vacancy ($900) = $6,900.
Net income = $18,000 − $6,900 = $11,100/year.
Simple ROI (cap rate) = $11,100 ÷ $200,000 × 100 = 5.55%.
If you bought with 20% down ($40,000 cash), your cash-on-cash return = $11,100 ÷ $40,000 × 100 = 27.75% (before mortgage payments).
Note the leverage effect: the same property yields 5.55% unleveraged but 27.75% on cash invested — leverage magnifies gains and losses.
⚖️ ROI vs CAGR vs IRR vs ROE vs ROAS
Finance has many “return” metrics, and they answer different questions. Here is the full comparison in one place:
| Metric | What it measures | When to use it |
|---|---|---|
| ROI | Total profit ÷ total cost | Quick overall profitability of any investment |
| Annualized ROI / CAGR | Equivalent yearly growth rate | Comparing investments held for different periods |
| IRR | Discount rate that makes net present value zero | Projects with cash flows spread over years |
| ROE | Net income ÷ shareholder equity | How efficiently a company uses shareholder money |
| ROIC | Operating profit ÷ all invested capital | Comparing capital efficiency across companies |
| ROA | Net income ÷ total assets | How efficiently assets generate profit |
| ROAS | Ad revenue ÷ ad spend | Marketing campaign efficiency (ignores other costs) |
| Payback period | Time to recover the initial cost | Judging risk and liquidity of a project |
The key insight: ROI ignores when money arrives. A rental property paying $1,000/month for years and a flip returning one lump sum can show the same ROI — use IRR when cash flows are spread over time, ROE when evaluating stocks or companies, and ROAS only for ad campaigns (it counts revenue, not profit).
📣 Marketing ROI & ROAS
Marketing has its own ROI math. ROAS (Return on Ad Spend) = Revenue ÷ Ad Spend. Marketing ROI = (Gross Profit − Marketing Cost) ÷ Marketing Cost × 100.
Worked example. You spend $1,000 on ads and generate $4,000 in revenue → ROAS = $4,000 ÷ $1,000 = 4:1 ($4 back per $1 spent). If gross profit is $3,000, marketing ROI = ($3,000 − $1,000) ÷ $1,000 × 100 = 200%.
A 4:1 ROAS sounds great — but it ignores ad costs and product costs. ROAS tells you the campaign produced revenue; marketing ROI tells you whether it actually made money.
⏳ Payback Period
Closely related to ROI: the payback period is how long it takes an investment to earn back its initial cost.
Payback period = Initial Cost ÷ Monthly Net Benefit. Worked example: you spend $10,000 on equipment that saves $500/month → payback = $10,000 ÷ $500 = 20 months (about 1.7 years).
Shorter payback means less risk: you recover your money sooner. ROI and payback answer different questions — “how much will I make?” vs “how fast do I get it back?” — and strong investment decisions use both.
⚠️ Limitations of ROI
ROI is simple, which is both its strength and its weakness:
1. No time dimension. A 40% ROI over 1 year is not the same as over 10 years — always annualize.
2. No risk adjustment. Two investments with 20% ROI can carry wildly different risks.
3. Ignores cash-flow timing. Money received today is worth more than money received in five years; ROI treats them the same. Use IRR for multi-year projects.
4. Costs are easy to omit. Leave out taxes, fees, or maintenance and ROI is inflated. Two investors can compute very different ROIs for the same asset just by defining costs differently.
5. Ignores non-financial returns. Community projects and green investments create SROI (Social Return on Investment) — measurable social or environmental value that never shows up in a financial ROI.
📚 Sources
Benchmark figures on this page are drawn from: NYU Stern School of Business (historical S&P 500 returns), Slickcharts (S&P 500 annual returns data), the US Federal Reserve and Bureau of Labor Statistics (inflation data), the IRS (2026 capital-gains tax brackets), and SEC Investor.gov (definitions of ROI, CAGR, and related metrics). For more finance tools, see the Business & Finance calculators on CalcifyAll.