ROI Calculator
Calculate Return on Investment (ROI) and annualized yields.
Common Investment Amounts
How to Use
Enter the initial investment
Input the total capital invested including any acquisition fees or commissions.
Enter the final value
Input the current value or sale proceeds before any taxes on gains.
Enter the holding period
Set the duration in years for an annualized (CAGR) return calculation.
Compare across investments
Use the annualized ROI to compare investments held for different time periods fairly.
What is ROI?
Return on Investment directly measures the amount of return on an investment relative to its cost. Annualized ROI goes a step further by showing what the equivalent compound annual growth rate (CAGR) would be over the specific time period you held the asset.
Frequently Asked Questions
What is a good ROI percentage?
A "good" ROI is relative to the asset class and risk level. The S&P 500 has historically returned about 10% annually (7% inflation-adjusted). Individual stocks, real estate, and startups will all have different expected benchmarks.
What is the difference between ROI and CAGR?
ROI measures the total percentage return from start to finish, regardless of time. CAGR (Compound Annual Growth Rate), also called Annualized ROI, normalizes that return into an equivalent yearly rate. CAGR is essential for comparing investments held for different durations.
Real-World Examples & Use Cases
Stock & Portfolio Performance Review
Individual investors reviewing their stock portfolio need ROI calculations to understand true performance. Buying 100 shares of a stock at $45 and selling at $72 after 3.5 years generates a total return of 60% ($2,700 gain on $4,500 investment). The annualized CAGR is approximately 14.4%. Comparing this to an S&P 500 index fund's 10% annualized historical average reveals whether active stock selection outperformed passive investing during the same period.
Real Estate Investment Analysis
Real estate investors calculate ROI across multiple dimensions: appreciation ROI on purchase price, rental yield as annual income divided by acquisition cost, and total return combining both. A property bought for $300,000 that appreciates to $420,000 over 7 years shows a 40% total appreciation, or roughly 4.9% CAGR. Adding net rental income of $84,000 over seven years (after expenses) brings total return to 68% or approximately 7.6% annualized — a more complete picture for comparing real estate vs. other asset classes.
Marketing Campaign Effectiveness
Digital marketers measure ROI for advertising campaigns, email marketing, and SEO investments. A company spending $15,000 on a Google Ads campaign that generates $52,000 in attributed revenue has an ROAS of 3.47x but the ROI on the ad spend alone is 247%. More accurately, subtracting the cost of goods sold from revenue gives the true profit ROI. Marketing ROI calculations guide budget allocation decisions, helping teams double down on high-performing channels and cut underperforming ones.
Business Capital Investment Decisions
Business owners evaluating capital expenditures use ROI to compare investment options. Should you spend $50,000 on new equipment that generates $12,000 in annual profit (24% annual ROI) or invest in an expansion that costs $80,000 but generates $25,000 annually (31.25% annual ROI)? ROI analysis provides a common language for comparing investments of different sizes. Combined with payback period analysis, ROI helps prioritize capital allocation in businesses with limited investment budgets.
How It Works
ROI and CAGR are two related but distinct return metrics: Simple ROI (Total Return %): ROI = ((Final Value - Initial Investment) / Initial Investment) × 100 = (Net Profit / Cost) × 100 Annualized ROI (CAGR — Compound Annual Growth Rate): CAGR = ((Final Value / Initial Investment)^(1/Years) - 1) × 100 Examples: $10,000 grows to $15,000 over 4 years: - Total ROI = (5,000/10,000) × 100 = 50% - CAGR = (1.5^(1/4) - 1) × 100 = 10.67% per year $10,000 grows to $15,000 over 2 years: - Total ROI = 50% (same absolute return) - CAGR = (1.5^(1/2) - 1) × 100 = 22.47% per year (much higher because shorter duration)
Frequently Asked Questions
What is the difference between ROI and CAGR?▼
What is a good ROI for an investment?▼
Does ROI account for taxes?▼
What is negative ROI?▼
What is the difference between ROI and ROE?▼
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