ROI Calculator - Free Return on Investment Calculator with Annualized Returns and Net Profit Analysis
Investment Details
The amount you invested initially
Current or final value of investment
Optional: Transaction fees, taxes, commissions
How long you've held the investment
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Enter your investment details and click "Calculate ROI" to analyze your returns
We'll calculate ROI, annualized returns, and provide personalized investment insights
Understanding ROI (Return on Investment)
What is ROI?
ROI (Return on Investment) is a financial metric that measures the profitability of an investment relative to its cost. It's expressed as a percentage and helps investors evaluate the efficiency and performance of their investments.
ROI = (Net Profit / Total Investment Cost) × 100
Where: Net Profit = Final Value - Initial Investment - Additional Costs
A positive ROI indicates profit, while a negative ROI indicates a loss. Higher ROI percentages generally represent better investment performance, though they should be evaluated alongside risk factors and time horizon.
ROI vs. Annualized ROI
Simple ROI shows the total return over the entire investment period without accounting for time. A 50% ROI could be achieved in 1 year or 10 years—simple ROI doesn't distinguish between them.
Annualized ROI normalizes returns to a per-year basis, making it easier to compare investments with different time horizons. It accounts for compound growth and provides a more accurate measure of long-term performance.
What is a Good ROI?
A "good" ROI depends on the investment type, risk level, and market conditions. Here are general benchmarks:
| Annualized ROI | Performance | Benchmark |
|---|---|---|
| 20%+ | Exceptional | Top-performing stocks, successful startups |
| 10-20% | Excellent | Above stock market average |
| 7-10% | Good | S&P 500 historical average |
| 5-7% | Moderate | Beats inflation, conservative growth |
| 2-5% | Low | Slightly above inflation (~2-3%) |
| Below 2% | Poor | May not beat inflation |
| Negative | Loss | Investment lost value |
Frequently Asked Questions
What is a good ROI percentage?
A "good" ROI depends on context, but generally: 7-10% annualized ROI is considered good (matching stock market averages), 10-20% is excellent, and 20%+ is exceptional. However, higher ROI often means higher risk.
How do I calculate ROI?
ROI = (Net Profit / Total Investment Cost) × 100. Net Profit = Final Value - Initial Investment - Additional Costs. For example, if you invest $10,000, sell for $15,000, and pay $500 in fees, your ROI = (($15,000 - $10,000 - $500) / $10,500) × 100 = 42.86%.
What's the difference between ROI and annualized ROI?
ROI shows total return over the entire period, while annualized ROI adjusts for time, showing average yearly return. A 50% ROI over 5 years is only 8.45% annualized, while 50% ROI in 1 year is 50% annualized.
Should I include taxes in ROI calculations?
Yes, for accurate ROI, include all costs like capital gains tax, dividend tax, and transaction fees. These reduce your net profit and give a realistic picture of investment performance.
Can ROI be negative?
Yes, negative ROI means the investment lost money. For example, if you invest $10,000 and the final value is $8,000, your ROI is -20%. This indicates a loss and may warrant reconsidering the investment.
How is ROI different from profit?
Profit is the absolute dollar amount gained (e.g., $5,000), while ROI is the percentage return relative to investment cost (e.g., 50%). ROI allows comparing investments of different sizes.