ROI Calculator
Calculate your return on investment — basic ROI, annualized return (CAGR), and side-by-side investment comparison.
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How to Use This Calculator
Tab "Basic ROI"
Enter your investment cost (what you paid) and final or current value (what it is worth now or at exit). The calculator instantly shows your ROI percentage, net profit or loss, and a multiple on invested capital. Use this tab for a quick sanity check on any investment.
Tab "Annualized ROI"
Add the holding period in years to convert your total return into an equivalent yearly rate (CAGR). This tab also shows why dividing total ROI by years gives the wrong answer — compounding means the true yearly rate is always lower than the simple division figure for positive returns.
Tab "Compare Investments"
Enter up to three investments — each with its own cost, final value, and holding period. The table ranks them by annualized return, the only fair metric when holding periods differ. You can rename each investment (e.g. "MSFT shares", "Index fund", "Buy-to-let") for a cleaner comparison.
The Formulas
ROI = (Final Value − Investment Cost) / Investment Cost × 100%
Net Profit = Final Value − Investment Cost
Annualized ROI (CAGR):
Annualized ROI = (Final Value / Cost)^(1 / Years) − 1
where ^ denotes exponentiation (raise to the power of)
Multiple on Invested Capital (MOIC):
MOIC = Final Value / Investment Cost
e.g. 2.0× means you doubled your money
Why simple division is wrong:
Simple per-year = Total ROI ÷ Years — this ignores compounding
50% over 5 years → Simple: 50÷5 = 10%/yr | Correct CAGR: (1.5)^(1/5)−1 = 8.45%/yr
All calculations use standard financial mathematics. No country-specific tax rates are applied. Results are pre-tax, pre-fee estimates.
Worked Examples
Example 1 — Basic ROI: $10,000 → $15,000
An investor buys shares for $10,000 and later sells for $15,000.
Calculation: ROI = ($15,000 − $10,000) / $10,000 × 100% = $5,000 / $10,000 × 100% = 50%. The investor made a 50% return on their original outlay.
Example 2 — Annualized ROI: Same $10K → $15K over 4 years
The same 50% gain, but held for 4 years. What is the true yearly return?
Calculation: CAGR = (15,000 / 10,000)^(1/4) − 1 = 1.5^0.25 − 1 = 1.1067 − 1 = 10.67%/yr. Dividing 50% by 4 gives 12.5% — 1.83 percentage points too high — because it ignores the compounding effect. Annualized ROI is the standard metric used by fund managers and analysts.
Example 3 — Compare: Stock A vs Stock B vs Real Estate
Three investments with very different costs, returns, and holding periods. Which performed best?
| Investment | Cost | Final Value | Years | Total ROI | Annualized ROI |
|---|---|---|---|---|---|
| 🥇 Stock A | $10,000 | $18,000 | 3 | 80.0% | 21.6%/yr |
| 🥈 Stock B | $5,000 | $9,000 | 5 | 80.0% | 12.5%/yr |
| 🥉 Real Estate | $200,000 | $280,000 | 7 | 40.0% | 4.9%/yr |
Stock A and Stock B both show 80% total ROI — but Stock A achieved it in 3 years vs Stock B's 5 years, giving a far higher annualized return (21.6% vs 12.5%). Real estate delivered only 4.9%/yr despite a large absolute profit. This is why annualized ROI — not total ROI — is the correct metric for comparing investments.
Understanding ROI: Key Concepts
What Does ROI Actually Measure?
ROI measures efficiency: for every dollar invested, how many dollars came back? A 50% ROI means you got back $1.50 for every $1.00 invested. It does not tell you how quickly — which is why time must be included when comparing investments. ROI is used for everything from stock portfolios to marketing campaigns to real estate.
Basic ROI vs Annualized ROI (CAGR)
Basic ROI answers: "How much did I make in total?" It's useful when you want to evaluate a single, completed investment. Annualized ROI (CAGR — Compound Annual Growth Rate) answers: "At what steady yearly rate did my money grow?" It's the standard for comparing investments with different holding periods.
The key insight: compounding means you cannot simply divide total ROI by years. $10,000 growing at 10% per year for 4 years does not give 40% — it gives 46.41%, because each year's gain builds on the last. Working backwards: 46.41% total over 4 years equals exactly 10%/yr annualized. Simple division would wrongly suggest 11.6%/yr.
Positive vs Negative ROI
A positive ROI means you made money; a negative ROI means you lost money. A −25% ROI is not just "25% down" — to recover from a −25% loss you need a +33.3% gain on the remaining capital. This asymmetry is why downside protection is so important in investing. The Basic ROI tab shows losses clearly in red, and the ROI gauge extends below zero to reflect this.
MOIC — Multiple on Invested Capital
MOIC (Multiple on Invested Capital) is simply Final Value / Cost. A 2.0× MOIC means you doubled your money; 3.0× means you tripled it. MOIC is commonly used in private equity and venture capital because it communicates the outcome in intuitive terms without requiring percentage calculations. A 100% ROI = 2.0× MOIC.
What ROI Doesn't Tell You
Basic ROI ignores risk, taxes, inflation, and opportunity cost. A 12% annualized return in a high-inflation environment may be worse in real terms than a 6% return in a low-inflation environment. After-tax returns can differ significantly by country and investment type. Use this calculator as a starting point, then factor in your specific tax situation and goals.
ROI in Business and Marketing
ROI applies beyond investments. In marketing, ROI = (Revenue Generated − Campaign Cost) / Campaign Cost. In business decisions, ROI helps evaluate whether a capital project, equipment purchase, or process improvement will pay off. The same formula applies — the definitions of "cost" and "value" simply change depending on context.
Frequently Asked Questions
Calculate for Your Country
For country-specific investment calculators that account for local capital gains tax, dividend tax, and investment accounts: