moneycalc

ROI Calculator

Calculate return on investment and annualized returns for any investment over any time period.

Investment Details

$
$
years

Return on Investment

50.0%
14.5% annualized
Amount Invested$10,000
Amount Returned$15,000
Net Gain / Loss$5,000
Total ROI50.0%
Annualized Return14.5%

How ROI Is Calculated

Return on Investment (ROI) measures the gain or loss relative to the original investment. The formula is simple: ROI = (Final Value - Initial Investment) / Initial Investment x 100. A $10,000 investment that returns $15,000 has an ROI of 50%.

The annualized return adjusts for the time period, making it possible to compare investments of different durations. It uses the formula: Annualized ROI = (Final Value / Initial Investment)^(1/Years) - 1. This is more useful than total ROI when comparing a 2-year investment to a 5-year investment.

Frequently Asked Questions

What is a good ROI?

It depends on the investment type and risk level. The S&P 500 has historically returned about 10% annually (7% after inflation). Real estate typically returns 8-12% annually including rental income and appreciation. A "good" ROI should beat inflation (3-4%) at minimum and ideally exceed what you could earn in a low-risk index fund.

Why is annualized return more useful than total ROI?

Total ROI doesn't account for time. A 50% return over 1 year is far better than a 50% return over 10 years. Annualized return normalizes the return to a per-year basis, so you can fairly compare investments held for different durations. The 10-year investment with 50% total ROI has an annualized return of only 4.1%.

Does this calculator account for fees and taxes?

Only if you include them in your numbers. Enter the amount you actually invested (including fees) and the amount you actually received (after fees). For tax impact, subtract estimated capital gains taxes from your returned amount. This gives you a "net ROI" which is your true return.