Free ROI Calculator
Return on investment as a percentage plus annualized rate.
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ROI
+50.00%
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Short answer
ROI = (gain ÷ cost) × 100. Annualized ROI accounts for the holding period so investments of different lengths can be compared fairly.
What is the ROI Calculator?
Return on Investment is a standard profitability metric expressing gain (or loss) as a percentage of the initial cost. Annualizing enables comparison across durations.
How does the ROI Calculator work?
Subtract cost from final value to get gain. Divide by cost and multiply by 100 for raw ROI. For annualized, take the t-th root of the ratio and subtract 1.
Formula
Variables
costInitial investmentfinalFinal valuetYears held
Explanation
Annualized ROI applies the compound-growth root to normalize returns across different holding periods.
Examples
Example 1: $10,000 → $15,000 over 3 years
ROI = 50%, annualized ≈ 14.5% per year.
Applications
- Real estate
- Stock and index fund returns
- Business project evaluation
Advantages
- Normalizes different investment sizes to a percentage
- Annualized figure enables cross-comparison
Limitations
- Ignores cash flows during the holding period (use IRR for those)
- Does not account for risk or volatility
Common mistakes
- Comparing raw ROI across different holding periods without annualizing
Tips
- Use annualized ROI when comparing a 2-year investment to a 10-year one
Related concepts
The ROI Calculator sits inside the Finance Calculators hub, in the investing & retirement cluster. Growing capital and planning for withdrawal. Understanding the terms below makes the output easier to interpret and easier to compare against neighbouring measures.
Practical use cases and industry applications
Understanding ROI
Return on Investment is a standard profitability metric expressing gain (or loss) as a percentage of the initial cost. Annualizing enables comparison across durations. Within finance calculators, roi belongs to the investing & retirement cluster, where it shares terminology and assumptions with closely related tools.
Learning how roi is calculated
Annualized ROI applies the compound-growth root to normalize returns across different holding periods. Working through the variables one at a time — cost, final, t — makes the result reproducible by hand and easier to sanity-check.
Using roi to make a decision
Real estate Stock and index fund returns Business project evaluation Because outputs depend on the assumptions you enter, run more than one scenario before committing to a figure.
How roi compares with related measures
compound growth, asset allocation, withdrawal rate, yield all describe adjacent aspects of investing & retirement. Comparing this calculator's output against those measures — using the related tools listed on this page — prevents a single metric from being read in isolation.
Frequently asked questions
ROI vs IRR?
ROI treats the investment as one entry and one exit. IRR accommodates intermediate cash flows and is preferred for phased investments.
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