ROI Calculator
Calculate return on investment (ROI) as a percentage, plus annualized ROI over a holding period.
Measure how well an investment performed. Enter what you put in and what you got out, and the calculator shows your ROI as a percentage — plus an annualized figure once you add a holding period, so you can compare investments of different lengths fairly.
ROI vs annualized ROI
ROI is simply (final value − cost) ÷ cost, expressed as a percentage. It's easy to read but ignores time — a 50% return is impressive in one year and mediocre over ten. Annualized ROI fixes this by expressing the total return as an equivalent yearly rate, so a two-year and a five-year investment can be compared on the same scale.
Why time changes everything
Two investments can share the same total ROI yet be worlds apart. A 50% return earned in one year is excellent; the same 50% spread over ten years is modest — roughly 4% a year. That's why annualized ROI exists: it restates the total gain as an equivalent yearly rate so investments of different lengths line up on the same scale. When you compare opportunities, lead with the annualized figure, and remember that ROI ignores risk entirely — a higher return often comes with a higher chance of loss.
What ROI does and doesn't tell you
Return on investment reduces a decision to one honest number: for every dollar you put in, how many dollars came back. A 25% ROI means a $1,000 outlay returned $1,250. Its strength is comparability — you can line up a marketing campaign, a piece of equipment, and a training course on the same scale even though they have nothing else in common. That is why finance teams reach for it first when ranking where to spend a limited budget.
Its blind spot is time. A 25% return is excellent over one year and mediocre over ten, yet the basic ROI formula treats them identically because it ignores how long the money was tied up. Two investments with the same ROI can differ wildly once you account for duration and risk. Use ROI to screen options quickly, then bring in an annualised figure — or a compound-growth calculation — before committing serious money. Pair it, too, with a clear-eyed view of the downside, because a headline return says nothing about the chance of losing the principal entirely.
Frequently asked questions
How is ROI calculated?
ROI = (final value − amount invested) ÷ amount invested, shown as a percentage. A $1,000 investment worth $1,500 has a 50% ROI.
Why use annualized ROI?
Because it accounts for how long you held the investment. It converts the total return into a yearly rate so you can compare investments of different durations fairly.
Does ROI account for risk?
No. ROI measures return only. Two investments with the same ROI can carry very different risk, so weigh the annualized return against how likely you are to lose money.
Should I include fees and taxes in ROI?
For a true picture, yes. Use the net amount you actually received after fees and taxes as the final value, and include all costs in the amount invested.
Does this ROI figure account for how long the investment ran?
No. Basic ROI is a simple ratio of gain to cost. To compare investments of different lengths fairly, convert to an annualised return.
Last updated: 2026-01-15