ROI Calculator

What is Return on Investment (ROI)?

Return on Investment — or ROI — is a percentage that expresses how much profit or loss an investment generated relative to its cost. It is one of the most widely used metrics in finance because it allows investors, business owners, and individuals to compare the efficiency of different investments regardless of the dollar amounts involved. A $500 profit on a $1,000 investment and a $5,000 profit on a $10,000 investment both represent the same 50% ROI.

The basic ROI formula is: ROI = (Final Value − Initial Cost) ÷ Initial Cost × 100. If you invested $10,000 and it grew to $14,500, your ROI is 45%. The calculator shows this alongside your net profit in dollars and, if you provide the time period, the annualised (compound annual) ROI.

Simple ROI vs. Annualised ROI

Simple ROI tells you the total return over the entire period. Annualised ROI — also called the Compound Annual Growth Rate (CAGR) — tells you the equivalent yearly return, which makes it much easier to compare investments held for different lengths of time.

For example, Investment A returned 80% over 6 years; Investment B returned 50% over 3 years. Simple ROI suggests A is better, but annualised ROI tells a different story: A returned roughly 10.4% per year, while B returned 14.5% per year. B was actually the stronger performer on an annual basis.

The annualised ROI formula is: Annualised ROI = (Final Value / Initial Cost)^(1 / Years) − 1. Enter the investment period in years to see this figure in the results.

What is a Good ROI?

A "good" ROI depends entirely on the asset class, time horizon, and risk level involved. Here are commonly cited benchmarks:

• US Stock Market (S&P 500): ~10% per year average historically (before inflation)
• Real estate: typically 8–12% depending on market and leverage
• High-yield savings accounts / CDs: 4–5% in recent years
• Small business investments: targets vary widely — 15–30% is common for private equity
• Marketing campaigns: a 5:1 ROI (500%) is often cited as a healthy benchmark

A higher ROI is generally better, but it must be weighed against risk. Government bonds have low ROIs but near-zero risk of loss. Startup investments can offer astronomical ROIs — or total losses.

How to Use the ROI Calculator

Enter the initial investment — the total cost you paid, including any fees or commissions. Enter the final value — the current or sale value of the investment. Optionally enter the investment period in years to get the annualised ROI. Click Calculate ROI and the results show your percentage return, net profit in dollars, the investment multiple (final/initial), and whether the investment was a gain or loss.

You can use this calculator for any type of investment: stocks, bonds, property, a business purchase, or even a marketing spend where you can quantify the financial return.