About this ROI Calculator
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
How to use this calculator
- Enter the Amount Invested (Cost).
- Enter the Amount Returned (Revenue/Value).
- Optionally enter the Investment Period in years to see the Annualized ROI.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Inputs explained
Amount Invested
The total cost of the investment. Include purchase price, fees, and commissions.
Amount Returned
The final value of the investment or the total money received from the sale.
Investment Period
The number of years you held the investment. Required to calculate the Annualized Return.
Understanding your results
Example scenarios
Simple Profit
You invest $1,000 and sell for $1,200. Profit is $200. ROI = ($200 / $1,000) * 100 = 20%.
Long Term
You invest $10,000 and it grows to $15,000 over 5 years. Total ROI is 50%. Annualized ROI is ~8.45% per year.
Key Features
- Simple & Annualized ROI
- Net Profit Calculation
- Negative ROI Support
Things to Keep in Mind
Does not account for inflation or tax implications of capital gains.
Tips & Best Practices
- Always include transaction fees and taxes in your 'Amount Invested' for a true net ROI.
- Compare Annualized ROI against benchmarks like the S&P 500 (historically ~10%) to gauge performance.
- ROI does not account for risk. Higher ROI usually requires higher risk.
Glossary of Terms
- Net Profit
- The actual gain after subtracting the cost from the total return.
- Annualized ROI
- The geometric average amount of money earned by an investment each year over a given time period.
- Capital Gains
- The profit from the sale of property or an investment.