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ROI Calculator

Measure how much an investment made or lost, as a total percentage and as a yearly growth rate you can compare with other options.

How it works

ROI = (amount returned − amount invested) ÷ amount invested × 100. Because ROI ignores time, the calculator also gives the annualized return, or compound annual growth rate (CAGR): (returned ÷ invested)^(1 ÷ years) − 1.

Worked example

You invest $10,000 and sell for $15,000 four years later. The gain is $5,000, so ROI is 50%. The annualized return is (15,000 ÷ 10,000)^(1/4) − 1 = 10.67% a year.

Why annualized return matters

A 50% return sounds great, but over 10 years it is only about 4.1% a year, less than many savings accounts at times. Comparing CAGR lets you judge investments held for different lengths of time fairly.

Tips for an accurate ROI

• Include all costs in the amount invested, such as fees, commissions and repairs on a property.
• Include all income in the amount returned, such as dividends, rent or interest.
• Taxes reduce your real return, so compare after-tax figures where you can.
• For marketing ROI, use the campaign cost as the investment and the profit (not revenue) it brought in as the return.

Frequently asked questions

What is a good ROI?

It depends on the risk. The US stock market has averaged roughly 10% a year before inflation over the long term, so many investors use that as a benchmark.

What is the difference between ROI and CAGR?

ROI is the total return over the whole period. CAGR is the steady yearly rate that would produce the same result.

Can ROI be negative?

Yes. A negative ROI means you got back less than you invested.

How do I calculate ROI on a rental property?

Add up everything you spent, including the deposit, closing costs and repairs, and everything you got back, including rent and the sale price, then use those totals.

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