ROI Calculator
Find the return on investment percentage from an initial cost and final value, plus the annualized return if you know the holding period.
The formula
ROI (%) = (Final value − Initial investment) ÷ Initial investment × 100. This gives the total return over the whole holding period, regardless of how long that period was.
- Annualized return (CAGR) = ((Final value ÷ Initial investment)^(1 ÷ years) − 1) × 100 — this spreads the total return evenly across each year, making returns over different time periods comparable.
Worked example
An investment of 10,000 that grows to 14,500 over 3 years has a net gain of 4,500 and a total ROI of 45%. Spread evenly, that works out to an annualized return of about 13.19% per year.
Why annualized return matters
A 45% total ROI sounds identical whether it happened in 1 year or 10 years, but those are very different outcomes. Annualizing the return lets you fairly compare investments held for different lengths of time.
A loss example
An investment of 8,000 that falls to 6,500 over 2 years has a net result of −1,500 and an ROI of −18.75%. The annualized figure is ((6,500 ÷ 8,000)^(1 ÷ 2) − 1) × 100 = −9.86% a year.
The same total return over a different time
A 45% total ROI on 10,000 turned into 14,500 works out to 13.19% a year over 3 years, but only about 7.71% a year if it took 5 years. This is why the holding period matters when you compare investments.
When the annualized figure is missing
The annualized return only appears when you enter a holding period and the final value is above zero. If you lose everything, ROI is −100% and there is no yearly rate to show.
Examples and limits
10,000 growing to 15,000 over 5 years is a net gain of 5,000, an ROI of 50.00% and an annualized return of 8.45%. The annualized figure is the one to compare with a savings rate, because 50% over five years is not 50% a year. An investment that ends where it started shows 0.00%.
An initial investment of zero is rejected with "Please enter a positive initial investment and a non-negative final value." because the percentage cannot be calculated. ROI also ignores taxes, fees and the timing of any extra deposits.
Guide
- Compound vs Simple Interest and the Rule of 72 — How simple and compound interest differ, why compounding frequency and the effective rate matter, and how far the Rule of 72 can be trusted.
Frequently asked questions
Does ROI account for fees, taxes, or inflation?
No — this is a simple gross comparison of final value versus initial cost. For a more realistic picture, subtract any fees or taxes from your final value before entering it, or account for inflation separately.
What's a 'good' ROI?
It depends entirely on the investment type, risk level, and time period — there's no single benchmark. Comparing the annualized return against a relevant reference (like a savings account rate or a market index) is usually more meaningful than judging ROI in isolation.