How to calculate return on investment
ROI shows how much you gained relative to what you put in. Subtract the amount invested from the final value to find your profit, divide by the amount invested, and multiply by 100. If you enter the years held, the calculator also shows the annualized return, which makes it easy to compare investments held for different periods.
The formula
ROI = (Final value − Amount invested) ÷ Amount invested × 100
For an annual figure, the annualized return is (Final ÷ Invested)1/years − 1.
Worked example
Invest $10,000, and it grows to $13,000 over 3 years:
- Profit: $13,000 − $10,000 = $3,000
- Total ROI: $3,000 ÷ $10,000 × 100 = +30%
- Annualized ROI: ≈ +9.1% per year
Why annualized ROI matters
The same +30% total means very different things depending on time. Over 3 years it's about 9.1% a year; over 10 years it's only about 2.7% a year. Annualized ROI levels the playing field so you can compare a quick flip against a long-term hold fairly.
ROI can be negative
If the final value is below what you invested, ROI is a loss. Putting in $5,000 and ending with $4,000 is a −20% ROI (a −$1,000 profit). The calculator shows losses in red.
Key terms & limitations
Amount invested — your total cost, ideally including fees. Final value — what it's worth now or when sold, ideally after taxes. Annualized return — the equivalent steady yearly rate. ROI is simple and useful, but it ignores risk, fees, taxes, and the timing of cash flows unless you build them into the numbers you enter.
Common mistakes to avoid
Comparing investments by total ROI when they were held for different lengths of time (use annualized instead). Leaving out fees and taxes, which inflates the result. Treating a high ROI as "good" without considering how much risk was taken. Forgetting that past performance doesn't predict future returns.
Frequently asked questions
What's a good ROI?
It depends on the risk and the asset. Long-term stock market returns have averaged roughly 7-10% per year before inflation, but individual results vary widely.
Can ROI be negative?
Yes. If the final value is less than the amount invested, your ROI and profit are negative — a loss.
Why is total ROI different from annualized?
Total ROI is the whole gain; annualized converts it to a yearly rate. 30% over 3 years ≈ 9.1%/yr, but over 10 years ≈ 2.7%/yr.
Does ROI include fees or taxes?
Not automatically. Use your net cost and after-tax final value for a true figure.
Does ROI measure risk?
No. It shows return only. A high ROI from a volatile bet isn't the same as a steady, lower-risk return.
How do I get an annualized figure?
Enter the years held and the calculator computes it: (Final ÷ Invested)^(1/years) − 1.
Is my data saved?
No. Everything runs in your browser; nothing is uploaded.