ROI Calculator
Calculate Return on Investment for your business and personal investments
The Return on Investment (ROI) calculator helps you measure the efficiency and profitability of an investment by comparing the gain or loss relative to the initial cost. ROI is one of the most widely used performance metrics for evaluating investment opportunities and business decisions.
ROI Calculation
ROI Analysis
Investment Breakdown
Performance Comparison
Investment Analysis
Excellent ROI of 35.0%! This investment significantly outperforms most alternatives and shows outstanding returns.
How to Use
1. Choose your calculation method (Simple, Annualized, or Total Return)
2. Enter your initial investment amount
3. Enter the final or current value of your investment
4. For Total Return, add any additional income received
5. For Annualized ROI, specify the time period
6. Click "Calculate ROI" to see your return analysis
What is ROI?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency and profitability of an investment. It measures the amount of return on an investment relative to the investment's cost.
ROI Formula
ROI = (Final Value - Initial Investment) / Initial Investment × 100%
Annualized ROI Formula
Annualized ROI = ((Final Value / Initial Investment)^(1/years) - 1) × 100%
ROI Interpretation
Excellent ROI (>20%)
Outstanding performance. Significantly outperforms most investment alternatives.
Good ROI (10-20%)
Strong performance. Meets or exceeds market averages and inflation.
Average ROI (5-10%)
Moderate performance. Beats inflation but may not justify higher risk investments.
Poor ROI (0-5%)
Low performance. Barely beats or fails to beat inflation and low-risk alternatives.
Negative ROI (<0%)
Loss. Investment has decreased in value and should be carefully evaluated.
Example Calculations
Stock Investment Example
• Initial Investment: $10,000
• Final Value: $13,500
• Time Period: 2 years
• Simple ROI: 35%
• Annualized ROI: 16.2%
Real Estate Example
• Initial Investment: $50,000 (down payment)
• Current Value: $75,000 (equity)
• Additional Income: $12,000 (rent profit)
• Total Return ROI: 74%
ROI vs Other Metrics
ROI vs IRR
ROI is simpler and shows total return, while IRR considers the time value of money and cash flow timing.
ROI vs NPV
ROI shows percentage return, while NPV shows absolute dollar value created by the investment.
ROI vs CAGR
CAGR (Compound Annual Growth Rate) is similar to annualized ROI but specifically measures compound growth.
ROI Limitations
Time Factor
Simple ROI doesn't account for how long it took to achieve the return. Use annualized ROI for time-adjusted comparisons.
Risk Consideration
ROI doesn't factor in the risk level of the investment. Higher returns often come with higher risk.
Cash Flow Timing
ROI doesn't consider when cash flows occur during the investment period, which can significantly impact actual returns.
Frequently Asked Questions
What's a good ROI for different investments?
Stocks: 7-10% annually, Real Estate: 8-12%, Business: 15-25%, High-risk investments: 20%+
Should I use simple or annualized ROI?
Use annualized ROI for investments held longer than one year to compare with other annual return rates.
How do I calculate ROI for ongoing investments?
Use current market value as the final value and include any income received (dividends, rent, etc.) in total return calculations.