How to use the ROI calculator
- Enter the amount invested — the total cost, including fees and commissions.
- Enter the amount returned — the sale price or current value, plus any dividends, rent or other income received.
- Optionally enter how many years you held the investment to see the annualized return.
ROI formula
Example: you invest $10,000 and three years later it is worth $15,000. Your ROI is 5,000 ÷ 10,000 = 50%. Annualized, that is 1.5^(1/3) − 1 = 14.47% per year.
Why annualized ROI matters
A 50% return sounds better than 30% — but not if the first took 10 years and the second took 2. Annualized ROI, also called the compound annual growth rate (CAGR), converts any return into an equivalent yearly rate so you can compare investments of different lengths, or compare them with a savings account or index fund.
| Total ROI | Over | Annualized |
|---|---|---|
| 50% | 3 years | 14.47% |
| 50% | 10 years | 4.14% |
| 100% | 5 years | 14.87% |
| 100% | 10 years | 7.18% |
| 30% | 2 years | 14.02% |
What is a good ROI?
It depends on risk and time. Broad stock market index funds have historically returned roughly 7%–10% a year on average over long periods, high-yield savings accounts and CDs a few percent, and rental property somewhere in between depending on leverage and costs. A higher expected return usually comes with higher risk.
Limitations of ROI
- Simple ROI ignores time — use the annualized figure to compare.
- It ignores risk and inflation.
- For investments with regular contributions or withdrawals, a money-weighted return (IRR) is more accurate.
Frequently asked questions
How do I calculate ROI?
Subtract the amount invested from the amount returned, divide by the amount invested and multiply by 100. Investing $2,000 and getting back $2,500 is a 25% ROI.
What is annualized ROI?
Annualized ROI is the yearly rate that would turn your investment into the final amount, also called CAGR. A 50% gain over 3 years is a 14.47% annualized return.
What is a good ROI?
There is no single answer, but many investors compare against the long-run stock market average of roughly 7% to 10% a year. Safer investments usually return less; riskier ones need higher expected returns to be worth it.
Can ROI be negative?
Yes. If you get back less than you invested, the ROI is negative. Investing $1,000 and getting $800 back is a −20% ROI.
What should I include in the cost of an investment?
Include everything you paid: the purchase price, fees, commissions, taxes paid on purchase and any money spent improving the asset. Include income received, such as dividends or rent, in the amount returned.
Results are estimates for educational purposes and are not financial advice. Actual loan terms, rates, taxes and fees vary by lender and location — confirm figures with a qualified professional before making decisions.
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