How to use the ROI calculator
- Enter the amount invested: everything you put in, including purchase costs and fees.
- Enter the amount returned: what you sold it for, or what it is worth now, plus any income it paid along the way.
- Choose how to enter the time: the length in years, or the dates you invested and got the money back.
The results show the ROI, the gain or loss, the annualized ROI, the money multiple, and how the same total return translates into a yearly rate over different holding periods.
The ROI formula
ROI measures the total gain relative to what you put in, without caring how long it took. The annualized ROI spreads that gain over the holding period as a compound yearly rate, the same calculation as a compound annual growth rate (CAGR). With dates, the calculator counts the days between them and divides by 365.25 to get the years.
Worked example
The calculator starts with $10,000 invested that returned $14,000 after 3 years.
- Gain: $14,000 − $10,000 = $4,000.
- ROI: $4,000 ÷ $10,000 × 100 = 40.00%.
- Money multiple: $14,000 ÷ $10,000 = 1.4×.
- Annualized ROI: 1.4^(1/3) − 1 = 1.1187 − 1 = 11.87% a year.
Check: $10,000 × 1.1187³ ≈ $14,000. If the same $10,000 had come back as $8,000, the ROI would be −$2,000 ÷ $10,000 = −20.00%. If you held it from January 1, 2024 to January 1, 2026 (731 days, 2.00 years), the 40% ROI annualizes to 18.31%.
Same ROI, different speeds
Total ROI hides time. Here is what a 40% ROI means as a yearly rate, depending on how long it took:
| Held for | Annualized ROI |
|---|---|
| 1 year | 40.00% |
| 2 years | 18.32% |
| 3 years | 11.87% |
| 5 years | 6.96% |
| 10 years | 3.42% |
| 20 years | 1.70% |
A 40% gain over 20 years barely beats a savings account, while the same gain in one year is excellent. Always annualize before comparing investments held for different periods.
Getting the inputs right
Include every cost in the amount invested: commissions, closing costs, renovation spending, or fees. Include every benefit in the amount returned: dividends, rent or interest you received, not just the sale price. Leaving out costs makes ROI look better than it was. Taxes are left out unless you subtract them yourself; for an after-tax ROI, reduce the amount returned by the tax you paid on the gain.
ROI also treats all the money as invested on day one and returned on the last day. If you added money or took some out along the way, use the IRR calculator, which handles cash flows at different times, or the average return calculator for a series of yearly returns.
Frequently asked questions
What is a good ROI?
It depends on the time and the risk. Compare the annualized ROI with what a safe alternative pays over the same period, such as a high-yield savings account or CD, and expect a higher return for taking more risk. A positive ROI that annualizes below inflation still loses buying power.
Can ROI be negative?
Yes. If you get back less than you put in, the ROI is negative, down to −100% if you lose everything. The annualized figure is negative too: getting $8,000 back from $10,000 after 3 years is −7.17% a year.
What is the difference between ROI and annualized ROI?
ROI is the total percentage gain over the whole period. Annualized ROI converts it into the steady yearly rate that would produce the same result, so you can compare a two-year investment with a ten-year one.
How do I calculate ROI on a rental property or business?
Use total cash invested (down payment, closing costs, repairs) as the amount invested, and the sale proceeds after selling costs plus the net income you collected as the amount returned. For a project that pays back over time, IRR is the more complete measure.
Related calculators
- Investment Calculator — Project an investment's end value, or find the contribution, return, starting amount or time a target needs.
- Average Return Calculator — Arithmetic and geometric average returns from yearly results, or the CAGR from a start and end value.
- IRR Calculator — Internal rate of return, NPV and payback period for an investment and a series of yearly or monthly cash flows.
- Compound Interest Calculator — How a starting balance and monthly contributions grow, with any compounding frequency.
Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.