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ROI Calculator

Calculate the return on investment (ROI) for any asset or project. See percentage return, annualized return, and net profit.

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Understanding ROI

Return on Investment (ROI) measures the profitability of an investment as a percentage of the original cost. The formula is:

Return on Investment
ROI = Net Profit Total Cost × 100%
Net Profit = Final Value − Total Cost  •  Total Cost = Initial Investment + Fees  •  Annualized = (Final/Cost)1/n − 1
A positive ROI means the investment gained value; a negative ROI means it lost money.

Simple ROI vs Annualized ROI

Simple ROI shows total return regardless of time. Annualized ROI (CAGR) adjusts for the investment period, making it easier to compare investments of different durations. A 50% return over 5 years is very different from 50% over 1 year.

Limitations of ROI

ROI doesn't account for risk, time value of money, or opportunity cost. Two investments with identical ROIs may have very different risk profiles. Always consider ROI alongside other metrics like the Sharpe ratio, internal rate of return (IRR), and net present value (NPV).

Frequently Asked Questions

What is a good ROI?
It depends on the asset class. Stocks historically average 7-10% annually after inflation. Real estate averages 8-12%. Any ROI above your benchmark or the risk-free rate (Treasury bonds) can be considered positive.
Does ROI include dividends?
Only if you include dividend income in your final value. For stocks, total return = capital appreciation + dividends reinvested. Always use total return for accurate ROI.
How is annualized ROI calculated?
Annualized ROI (CAGR) = (Final Value / Initial Cost)^(1/years) - 1. It shows the equivalent annual growth rate that would produce the same total return over the period.
Should I factor in taxes?
For a true after-tax ROI, subtract capital gains taxes from your profit. Long-term gains (held >1 year) are taxed at 0-20%, while short-term gains are taxed as ordinary income.

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