ROI Calculator
Calculate return on investment percentage from cost and revenue.
What Is the ROI Calculator?
The ROI Calculator measures the profitability of an investment as a percentage of the initial cost. It computes the net gain or loss and, when a time period is provided, calculates the Compound Annual Growth Rate (CAGR) — the annualized equivalent return assuming compounding each year.
Formula
How to Use
Enter your initial investment amount and the final value at the end. Optionally enter the number of years you held the investment to get the annualized CAGR. Click Calculate to see ROI percentage, net profit/loss, and annualized return.
Example Calculation
Investment: $10,000 Final Value: $18,000 after 5 years Net Profit = $18,000 − $10,000 = $8,000 ROI = $8,000/$10,000 × 100 = 80% CAGR = (18000/10000)^(1/5) − 1 = 1.8^0.2 − 1 ≈ 0.1247 = 12.47%/year
Understanding ROI
Return on Investment is the universal metric for evaluating the efficiency of an investment. Whether evaluating stocks, real estate, a new business venture, or marketing spend, ROI provides a simple, comparable percentage.
CAGR is particularly useful for comparing investments held for different durations. A 100% ROI over 10 years is much less impressive than 100% ROI over 2 years, even though the raw percentage is the same. CAGR shows this difference: ~7.2%/year vs ~41.4%/year.
The Rule of 72 is a handy mental math shortcut: divide 72 by the annual return rate to estimate how many years it takes to double your money. At 8% CAGR, money doubles in roughly 72/8 = 9 years.
Frequently Asked Questions
What is the difference between ROI and CAGR?
ROI is the total return over the entire holding period. CAGR (Compound Annual Growth Rate) is the equivalent yearly rate that, if compounded annually, would produce that same total return. CAGR accounts for time; ROI does not.
What counts as a good ROI?
It depends on asset class and time period. Stock markets have historically returned 7–10% annually (inflation-adjusted). Real estate typically returns 4–8% annually. A "good" ROI should be compared to relevant benchmarks.
Can ROI be negative?
Yes. If Final Value < Initial Investment, ROI is negative, representing a loss. For example, investing $1,000 and ending with $700 gives ROI = −30%.
Does this account for taxes and fees?
No. This calculator uses gross values. To get a more accurate picture, deduct transaction fees, management fees, and applicable capital gains taxes from your final value before entering it.
What is the difference between simple ROI and annualized ROI?
Simple ROI is the total percentage gain or loss. Annualized ROI (CAGR) is the per-year equivalent, allowing fair comparison between investments held for different time periods.
Related Tools
Percentage Change Calculator
Calculate the percentage increase or decrease between two values quickly and acc…
Compound Interest Calculator
Calculate compound interest on savings and investments over time.…
Markup Calculator
Calculate markup percentage, selling price, and profit margin from cost and reve…