Return on Investment (ROI) Calculator
ROI Calculator — Return on Investment
Calculate investment gain, ROI %, annualized ROI, and investment duration with date or length mode
Date or Length Mode
Switch between specifying exact investment dates or just the number of years to suit your use case.
Annualized ROI
Also called CAGR — lets you compare investments of different durations on a fair, per-year basis.
Instant Results
Results update live as you adjust sliders or type values — no page reload needed.
Understanding ROI
What is ROI and How is it Calculated?
A complete guide to Return on Investment for investors, businesses, and everyday decision-makers
Return on Investment (ROI) is one of the most widely used financial metrics to evaluate the profitability or efficiency of an investment. It expresses the gain or loss generated relative to the amount invested, as a percentage. Because of its simplicity and universal applicability, ROI is used across industries — from evaluating stocks and real estate to measuring the effectiveness of a marketing campaign or even a new hire.
ROI may be confused with Rate of Return (ROR). While they are sometimes used interchangeably, a key distinction is that ROR often denotes a specific time period (e.g., annual), whereas basic ROI does not inherently account for time. This is why the annualized ROI metric — also known as CAGR (Compound Annual Growth Rate) — was developed to allow meaningful comparisons across investments held for different durations.
The basic ROI formula is straightforward:
For annualized ROI (to account for time), the formula adjusts for the holding period using compound growth:
Example: Bob invests $50,000 in a sheep farming operation. His total returns to date sum to $70,000. ROI = ($70,000 − $50,000) ÷ $50,000 × 100 = 40%. If this was over 5 years, the annualized ROI = (1.40^0.2 − 1) × 100 ≈ 6.96% per year.
Track how much a stock or portfolio has grown relative to what you paid. Compare ROI across different holdings to rebalance your portfolio effectively.
Measure returns from property purchases after accounting for rental income, capital appreciation, taxes, and expenses. ROI helps compare different properties side by side.
Businesses use ROI to evaluate campaigns, new hires, or capital expenditures. Marketing ROI measures revenue generated per rupee/dollar spent on advertising.
ROI accuracy depends on correctly defining the investment cost. For real estate, does it include taxes, insurance, and maintenance? For stocks, does it include brokerage fees and taxes on capital gains?
A 1,000% ROI diamond over 50 years may be less attractive than a 50% ROI land deal over 6 months. Always use annualized ROI when comparing investments of different durations.
ROI doesn't account for investment risk. A higher ROI investment may carry significantly more risk. Always supplement ROI analysis with risk measures like standard deviation or Sharpe ratio.
Basic ROI ignores dividends, rental payments, or other cash flows during the holding period. For such investments, use IRR (Internal Rate of Return) for a more complete picture.