Use this return on investment calculator to quickly estimate how well an investment performed. Enter your total cost, ending value, and any cash income to calculate both simple ROI and annualized ROI (CAGR). It works for stocks, real estate, small business projects, and personal side hustles.
ROI Calculator
What is return on investment (ROI)?
Return on investment is a performance metric that compares how much you gained (or lost) relative to how much you invested. It helps answer one core question: Was this investment worth it? ROI is popular because it is simple, flexible, and easy to compare across opportunities.
For example, if you spent $10,000 and ended up with $12,000 in value plus $500 in income, your total gain is $2,500. ROI tells you that gain as a percentage of your original investment.
Basic ROI formula
ROI (%) = [(Ending Value + Income Received) − Total Investment] / Total Investment × 100
- Total investment includes the initial amount plus additional costs.
- Ending value is what the asset is worth now (or when sold).
- Income received includes dividends, rent, distributions, or cash payouts.
How to use this calculator
- Enter your initial investment.
- Add any additional costs (fees, maintenance, upgrades, commissions).
- Enter the current or final value of the investment.
- Add income received during the holding period.
- Optionally enter years held to calculate annualized return (CAGR).
The calculator outputs your net profit/loss, simple ROI, value multiple, and annualized ROI when possible.
Simple ROI vs annualized ROI (CAGR)
Simple ROI gives total return for the entire period. It is excellent for quick comparisons, but it does not account for time.
Annualized ROI (CAGR) shows average yearly growth. This is more useful when comparing investments held for different durations.
- Investment A: 30% total ROI in 1 year
- Investment B: 30% total ROI in 5 years
Both have the same simple ROI, but very different annualized returns. Time matters.
Example ROI calculation
Suppose you invest $20,000 in a rental property update project, spend an additional $2,000 on closing and repairs, and later sell at a value of $27,000 while collecting $1,000 in net rent.
- Total investment = $22,000
- Total return value = $27,000 + $1,000 = $28,000
- Net profit = $28,000 − $22,000 = $6,000
- Simple ROI = $6,000 / $22,000 = 27.27%
If held for 2 years, the annualized ROI would be lower than 27.27% per year, because that 27.27% happened over two years total.
How to interpret your ROI result
- Positive ROI: The investment gained value overall.
- Zero ROI: You broke even.
- Negative ROI: You lost money.
High ROI is attractive, but always evaluate risk, volatility, time horizon, taxes, and liquidity. A safer 8% return may be better than a risky 20% return depending on your goals.
Common ROI mistakes to avoid
- Ignoring fees, taxes, and maintenance costs.
- Comparing returns without adjusting for time.
- Using gross income instead of net income.
- Forgetting opportunity cost (what else that money could have earned).
- Making decisions based on ROI alone without risk analysis.
Tips to improve investment returns
- Reduce avoidable costs and transaction fees.
- Reinvest income when it matches your strategy.
- Diversify to manage downside risk.
- Review performance periodically with consistent metrics.
- Compare results with a benchmark (index fund, bond yield, or target rate).
Frequently asked questions
Is ROI the same as profit margin?
No. Profit margin is profit divided by revenue. ROI is profit divided by investment cost.
Can ROI be negative?
Yes. If your final value plus income is less than what you invested, ROI is negative.
Why did I get “annualized ROI not available”?
Annualized ROI requires a positive ending value and a positive number of years. If either is missing or invalid, CAGR cannot be computed.
Does this calculator include taxes?
Only if you include tax impact in your additional costs or reduce your ending value/income accordingly.