About this calculator
ROI — return on investment — answers the simplest question in finance: for each dollar you put in, how many cents did you get back? It is used for everything from a stock holding to a rental property to a marketing campaign. Its weakness is time: a 50% ROI over one year is superb, over twenty years it is poor. That is why this calculator also reports the annualized return, the per-year rate that would produce the same result with steady compounding.
ROI here is measured on cash values: what you put in versus what you got back (final value plus anything paid out along the way, such as dividends or rent, if you include them in the returned amount).
How to use it
- Enter everything you put in as the amount invested.
- Enter the final value plus any payouts you received as the amount returned.
- Enter how many years the money was invested (fractions allowed).
- Compare investments using the annualized return, not the total ROI.
The formula
Total ROI is the gain as a percentage of what you put in. The annualized return spreads that growth evenly across the years as compound growth — mathematically it is the compound annual growth rate (CAGR) of the investment.
Worked example
Invest $10,000 and get back $15,000 after 3 years: the gain is $5,000 and total ROI is 50%. Annualized, that is 14.47% a year — the fair number to set against, say, a savings account's APY or the stock market's long-run average of roughly 10% a year before inflation.
Frequently asked questions
What is a good ROI?
It depends on the risk taken and the alternatives. US stocks have historically returned about 10% a year before inflation (7% after); high-yield savings accounts pay roughly 4%–5% with no risk. An investment returning less than a risk-free account while carrying real risk is a bad ROI, whatever the headline percentage.
What is the difference between ROI and annualized return?
ROI ignores time; annualized return includes it. A 100% ROI could mean doubling in a year (spectacular) or over 30 years (about 2.3% a year — worse than inflation, typically). Always compare investments on the annualized figure over the same period.
Can ROI be negative or over 100%?
Yes to both. Losing half your money is −50% ROI, and the worst possible is −100% (a total loss, for ordinary unleveraged investments). Gains have no ceiling: an early investment that returns ten times its cost is a 900% ROI.
Does ROI account for fees, taxes and inflation?
Only if you build them into the amounts. For an honest personal figure, use what you actually paid (including purchase fees) as invested, and what you would actually keep (after sale fees, before tax) as returned. To compare against inflation, subtract the inflation rate from the annualized return as an approximation.