ROI Calculator
Calculate return on investment as a percentage, net profit, and the annualized rate (CAGR) over the holding period.
Return on investment
+35%
Net profit
+$3,500.00
Total return
135%
Annualized (3y)
+10.52%
ROI = (return − investment) ÷ investment. The annualized figure is the compound annual growth rate (CAGR): the steady yearly rate that turns the investment into the return over the holding period. It is the fairer number when comparing investments held for different lengths of time. This is a simple gain/cost model — it ignores taxes, fees, dividends or interest paid out along the way, and the timing of any additional contributions.
ROI and annualized return, without the jargon
Return on investment is the simplest measure of whether something paid off: the net gain divided by what you put in. Invest $10,000, get back $13,500, and the $3,500 profit is a 35% ROI. It is easy to compute and easy to communicate, which is why it appears everywhere from stock trades to marketing campaigns to home renovations.
Its weakness is that it ignores time. A 35% return is outstanding in one year and unremarkable over ten. The annualized figure — the compound annual growth rate, or CAGR — fixes this by expressing the result as a steady yearly rate that compounds to the same ending value. For 35% over three years that is roughly 10.5% per year. When you are choosing between investments of different lengths, compare the annualized numbers, not the headline ROI.
This is a lump-sum model: one amount in, one amount out, held for a set period. If you contributed in instalments, the total ROI is still correct but the annualized rate is not, because it cannot know when each dollar arrived. That situation calls for a money-weighted return (internal rate of return, IRR), which most spreadsheet software can compute.
For an honest result, put every cost into "amount invested" — purchase price, commissions, fees, improvements, carrying costs — and use your actual after-tax proceeds as "amount returned". Leaving costs out or ignoring capital-gains tax makes any investment look better than it really was. ROI can be negative: recovering $8,000 of a $10,000 investment is a −20% return.
These figures are educational, not investment advice. Past returns do not predict future ones, and this calculator does not model risk, volatility, dividends reinvested along the way, or inflation.
Key formulas (reference)
ROI % = (returned − invested) ÷ invested × 100 net profit = returned − invested total return = returned ÷ invested × 100 annualized % = ((returned ÷ invested) ^ (1 ÷ years) − 1) × 100 // CAGR
Related tools
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Frequently Asked Questions
How is ROI calculated?
Return on investment is the net gain divided by the amount invested, expressed as a percentage: ROI = (amount returned − amount invested) ÷ amount invested × 100. Investing $10,000 and ending with $13,500 is a $3,500 gain, or 35% ROI.
What is the annualized return (CAGR)?
The compound annual growth rate is the constant yearly rate that would grow your investment from its starting value to its ending value over the holding period. It is calculated as (ending ÷ starting)^(1 ÷ years) − 1. A 35% total return over 3 years is about 10.5% per year, because the growth compounds.
Why compare annualized returns instead of total returns?
Total ROI ignores time. A 35% return is excellent over one year and mediocre over ten. Annualizing puts investments of different durations on the same footing so you can compare them fairly.
Does this account for taxes and fees?
No. This is a simple gain-versus-cost model. Real returns are reduced by trading commissions, fund expense ratios, and capital-gains or income tax. For a true picture, use your after-tax proceeds as the "amount returned" and include all costs in the "amount invested".
How do I handle additional contributions made over time?
This calculator assumes a single lump sum in and a single amount out. If you added money in instalments, the simple ROI still works for total gain, but the annualized figure will be inaccurate because it cannot know when each contribution was made. A money-weighted return (IRR) is the correct tool for that.
Can ROI be negative?
Yes. If the amount returned is less than the amount invested, ROI is negative and the result shows a loss. A −20% ROI means you recovered 80% of your original capital.
What counts as the "amount invested"?
Every dollar you put at risk to get the return: the purchase price plus transaction costs, improvements, or carrying costs. Leaving costs out inflates the ROI and makes the investment look better than it was.