About the ROI calculator
Return on investment (ROI) compares what you gained or lost with what you put in. This calculator gives the gain, the ROI percentage and, if you give the time period, the annualised return, which makes investments of different lengths comparable.
It works for shares, property, a business purchase, a marketing campaign or any decision where you can state a cost and a final value.
Who should use the ROI calculator
- Investors comparing two holdings that ran for different lengths of time.
- Small business owners judging whether equipment or a campaign paid for itself.
- Students and analysts who need a quick, transparent ROI and CAGR figure.
How to use the ROI calculator: what each input means
- Amount invested
- Your total cost, including purchase fees if you want a net result.
- Amount returned
- The final value or sale proceeds, plus any income you received (dividends, rent, revenue).
- Investment period
- The length in years, or a start and end date, so the annualised return can be calculated.
How the ROI calculator works: method and formula
ROI is the gain divided by the cost, shown as a percentage. The annualised return answers a different question: what steady yearly rate would turn the starting amount into the final amount over the period. It uses the compound annual growth rate formula.
When you give dates, the length is counted in days and divided by 365.25 to allow for leap years.
- ROI
- ROI = (Returned − Invested) ÷ Invested × 100%
- Annualised return (CAGR)
- CAGR = (Returned ÷ Invested)^(1 ÷ years) − 1
How to read your ROI calculator result
A positive ROI means a gain and a negative ROI means a loss. A large ROI over a long period can be less impressive than a modest ROI over a short one, which is why the annualised figure is useful. Neither number says anything about risk.
If the returned amount is lower than the invested amount, the annualised figure is negative. If it is zero, the investment was wiped out (−100%).
ROI Calculator worked example
You invest $10,000.00 and it is worth $14,000.00 after 3 years.
- Gain = $14,000.00 − $10,000.00 = $4,000.00.
- ROI = $4,000.00 ÷ $10,000.00 = 40.00%.
- CAGR = (14,000 ÷ 10,000)^(1/3) − 1 = 11.869% a year.
ROI 40.00% in total, or about 11.87% a year.
Practical uses of the ROI calculator
- Comparing a 3-year and a 7-year investment on a like-for-like basis.
- Reviewing whether a piece of equipment or software earned back its cost.
- Evaluating a rental property by including rent in the returned amount.
Assumptions and limitations of this calculator
- Ignores risk, taxes, inflation and the timing of any cash flows between the start and end. For investments with several deposits or withdrawals, an internal rate of return (IRR) is more appropriate.
- Results depend on what you count as cost and return. Be consistent when you compare options.
- Past results do not predict future returns. Not financial advice.