ROI Calculator: Return on Investment

ROI answers one question: how much did you earn for every dollar you put in? The gain is simply the final value minus the cost, and dividing by the cost scales that profit relative to the size of the investment. The result is usually written as a percentage.

• Investment gain: gain = final value − cost of investment
• Simple ROI: ROI = gain ÷ cost × 100
• Annualized ROI: (1 + ROI)^1/years − 1, where ROI is the decimal form of the simple ROI and years is the holding period
• Negative ROI: when the final value is below the cost, the gain — and therefore the ROI — is negative, which means the investment lost money

Sources: Investopedia — Return on Investment (ROI); Corporate Finance Institute — Return on Investment (ROI).

Suppose you buy shares for $10,000 and sell them two years later for $13,000. The gain is $13,000 − $10,000 = $3,000. Divide by the cost: $3,000 ÷ $10,000 = 0.30, so the simple ROI is 30%. To annualize it over the 2-year holding period: (1 + 0.30)^1/2 − 1 ≈ 0.1402, an annualized ROI of about 14.02% per year.

Four inputs are all it takes. Use total figures — include purchase fees in the cost, and include any income the investment paid you (dividends, rent) in the final value for a complete picture.

Step by step

1. Enter the cost of investment. Everything you paid: purchase price plus any fees or commissions. This must be greater than zero.
2. Enter the final value. What the investment is worth now, or what you sold it for. If it fell in value, just enter the lower number — the calculator will report a loss.
3. Enter the investment time in years and months. This is only used for the annualized ROI. Leave it as zero if you only want the simple ROI.
4. Press Calculate. Read the gain or loss in dollars, the ROI percentage, the annualized ROI and the step-by-step working underneath.

"ROI" and "rate of return" are often used as synonyms, and in practice simple ROI is the rate of return for the whole holding period: the gain relative to the cost. The difference is mostly in convention — "rate of return" is the general concept, while "ROI" is the specific percentage formula most people reach for first.

Where compounding enters the picture, ROI stops being enough on its own. An investment that grows by reinvesting its earnings each year behaves differently from one that pays out a lump sum at the end, which is why a compound interest calculator is the natural next step when your returns are reinvested rather than realized at sale.

A 30% return sounds better than a 15% return — until you learn the first took two years and the second took six months. Annualized ROI (also called the compound annual growth rate) converts any holding period into an equivalent per-year rate, so investments of different lengths can be compared on equal terms.

Annualized ROI examples

The table shows why time matters so much: doubling your money over ten years is only about 7.18% a year. When you want to project how a steady yearly return would accumulate into the future — including regular contributions — an investment calculator picks up where simple ROI leaves off.

ROI is a blunt instrument: simple to compute and easy to compare, but it hides several things that can change which investment was really better.

• Time, in the simple version. Two investments can both show 30% ROI while one took a year and the other took a decade. Always annualize before comparing.
• Risk. A 30% ROI from government bonds and a 30% ROI from a speculative startup are not the same achievement — ROI says nothing about the odds of losing your money.
• Cash flow timing. ROI assumes one lump sum in and one lump sum out. If you deposited money midway through, the true return depends on when each dollar was invested, which plain ROI cannot capture.
• Non-financial returns. Learning, brand value, or the use you got from an asset never appear in the formula, even when they were part of the reason to invest.

Finance references such as Investopedia's ROI guide treat ROI as a profitability ratio of net profit to cost — useful for ranking opportunities, but never the whole story on its own.