ROI Calculator

Return on investment, or ROI, is a simple, universal measure of profitability that expresses the gain or loss on an investment relative to its cost, as a percentage. Its appeal is its simplicity and versatility: the same formula applies whether you're evaluating a stock purchase, a rental property, a marketing campaign, a piece of equipment or an entire business decision. Because it's a ratio, ROI lets you compare the efficiency of very different investments on a common scale.

The calculation is straightforward. You take the net profit — the amount you got back minus the amount you put in — and divide it by the cost, then multiply by 100 to get a percentage. An investment that cost $10,000 and returned $13,000 produced a $3,000 profit and a 30% ROI. A negative result simply means the investment lost money. This clarity is why ROI is one of the most widely quoted figures in finance and business.

ROI's biggest limitation, however, is that the basic formula ignores time. A 30% ROI earned in one year is far better than the same 30% earned over five years, yet plain ROI treats them identically. That's why annualizing ROI is so useful: by factoring in the holding period, you convert the total return into a per-year rate (closely related to CAGR) that allows fair comparison between investments held for different durations. A short, high ROI can annualize to an exceptional rate, while a large total ROI spread over many years may annualize to something modest.

It's also important to capture all costs and returns for an honest figure. True ROI should include fees, taxes, maintenance and any ongoing costs, not just the headline purchase price — and all income generated, not just the final sale value. Leaving out costs flatters the result; leaving out income understates it. In business, related metrics like return on equity or return on ad spend apply the same logic to specific contexts.

Used thoughtfully, ROI is a powerful quick-check for whether an investment paid off and how it stacks up against alternatives. Pair it with the annualized figure for time-sensitive comparisons, and remember that a high historical ROI never guarantees future results. This calculator gives you the net profit, the ROI percentage, and the annualized rate so you can judge any investment clearly.