💹 ROI Calculator
Calculate your return on investment (ROI), annualized return, and total gains. Works for stocks, real estate, business investments, and more.
Understanding ROI
ROI Formula
Example: Invested $10,000, now worth $15,000 → ($15,000 - $10,000) ÷ $10,000 × 100% = 50% ROI
Annualized Return Formula
This accounts for compounding and time, giving you a true annual average return.
Real-World ROI Examples
- Stock Investment: Bought 100 shares at $50 ($5,000), sold at $75 ($7,500) after 2 years = 50% ROI, 22.5% annualized
- Real Estate: Bought house for $300k, sold for $450k after 5 years = 50% ROI, 8.4% annualized (plus rental income!)
- Business Investment: Invested $50k in equipment, generated $80k profit over 3 years = 60% ROI, 17% annualized
Why Use This Calculator?
Compare Investment Performance Objectively
Calculate true return percentage to compare different investments fairly. A $50,000 real estate gain on $200,000 invested (25% ROI) beats $30,000 stock gain on $50,000 invested (60% ROI)? No - second investment is 2.4x better return.
Calculate Annualized Returns for Time Adjustment
Simple ROI ignores time. 50% return over 5 years (8.4% annually) is worse than 30% return over 1 year (30% annually). Annualized ROI enables fair comparison across different time periods - essential for rational decisions.
Evaluate Real Estate Investment Returns
Calculate ROI on rental property including purchase price, renovation costs, rental income, expenses, and sale price. A $300,000 property generating $15,000/year net income + $100,000 appreciation over 5 years = 13.3% annualized ROI.
Measure Business Investment Profitability
Determine if business expenses generate positive returns. Spent $10,000 on marketing campaign that generated $45,000 revenue (cost $20,000 to fulfill) = $25,000 net profit = 150% ROI. Guides future investment allocation.
Assess Stock or Crypto Investment Gains
Calculate total return including dividends/distributions. Bought stock at $50, sold at $70, received $5 dividends = $25 gain on $50 cost = 50% ROI. Factor in all income sources for accurate performance measurement.
Determine If Investment Beats Alternatives
Compare actual ROI against benchmarks. 6% annual return sounds good until you realize S&P 500 averaged 10%. Your investment underperformed by 40% relative to market - money would've grown faster in index fund.
Step-by-Step Guide
Enter Your Initial Investment Amount
Input total money invested at start. Include purchase price, fees, commissions, closing costs, renovation expenses - everything spent to acquire asset. This is your cost basis for ROI calculation.
Example:
Example: Stock purchase: $10,000 + $50 commission = $10,050 initial investment. Real estate: $250,000 purchase + $15,000 closing + $30,000 renovation = $295,000 total investment
Calculate Your Final Value or Proceeds
Enter amount received when sold/current market value. Include sale price, dividends received, rental income earned, interest payments - all money returned from investment. Subtract selling costs like commissions and fees.
Example:
Example: Sold stock for $15,000 - $50 commission + $500 dividends = $15,450 final value. Rental property: sold $380,000 - $20,000 costs + $75,000 net rents = $435,000 total
Determine Investment Time Period
Count years and months from initial purchase to sale/current date. Precise timeframe needed for annualized return calculation. Even 6 months difference significantly affects annualized ROI percentage.
Example:
Example: Bought Jan 2020, sold Dec 2024 = 5 years. Bought March 2023, sold October 2024 = 1.58 years. Held 8 months = 0.67 years
Calculate Simple ROI Percentage
ROI = (Final Value - Initial Investment) ÷ Initial Investment × 100. This shows total return percentage regardless of time. A $20,000 gain on $80,000 invested = 25% ROI.
Example:
Example: Invested $50,000, final value $67,500. ROI = ($67,500 - $50,000) ÷ $50,000 = 35% total return over investment period
Calculate Annualized ROI for Fair Comparison
Annualized ROI = [(Final Value ÷ Initial Investment) ^ (1 ÷ Years)] - 1. This shows average yearly return, enabling fair comparison between investments held different time periods.
Example:
Example: 80% total return over 4 years = 15.8% annualized. 50% return over 2 years = 22.5% annualized. Second investment actually performed better despite lower total %
Include All Income and Costs
Don't just calculate price appreciation. Include dividends, interest, rental income, tax benefits on gains side. Include fees, maintenance, property taxes, insurance on cost side. Complete picture reveals true ROI.
Example:
Example: Stock: $10,000 → $13,000 (30% gain) + $1,200 dividends = 42% total ROI. Rental: $50,000 appreciation + $30,000 net rents - $15,000 expenses = $65,000 net gain
Compare Against Benchmark Returns
Calculate if your ROI beats relevant benchmark. Stocks vs. S&P 500 (10% historical average). Real estate vs. local market appreciation. Bonds vs. Treasury yields. Beating benchmark = good investment choice.
Example:
Example: Your stock portfolio: 12% annualized. S&P 500 same period: 10%. You beat market by 20% - good active management. If you got 8%, you underperformed - should've indexed
Factor in Taxes for After-Tax ROI
Capital gains tax reduces actual profit. Long-term gains (held 1+ year): 0-20% federal. Short-term gains: taxed as ordinary income (10-37%). After-tax ROI shows money actually kept.
Example:
Example: $20,000 gain on short-term trade in 24% bracket = $4,800 tax = $15,200 net profit. Long-term gain at 15% = $3,000 tax = $17,000 net. Tax treatment matters
Adjust for Inflation to Calculate Real ROI
Nominal ROI doesn't show purchasing power gain. Subtract average inflation (2-3% annually) for real ROI. A 6% nominal return with 3% inflation = only 3% real purchasing power gain.
Example:
Example: 8% annualized return over 10 years with 2.5% average inflation = 5.5% real return. Your purchasing power grew 72% (not 116%) over decade
Calculate ROI on Ongoing Investments
For assets still held, use current market value as final value. This shows unrealized gains. Only counts as actual return when sold (realized), but useful for performance tracking and rebalancing decisions.
Example:
Example: Bought rental property 3 years ago for $200,000, currently worth $260,000, earned $30,000 net rent. Current ROI = ($260,000 + $30,000 - $200,000) ÷ $200,000 = 45%
Expert Tips & Strategies
Always Annualize Returns for Fair Comparison
Never compare raw ROI% between investments held different timeframes. A 40% return over 3 years (11.9% annually) is worse than 25% return over 1 year (25% annually). Annualize everything before deciding which investment performed better.
Include Opportunity Cost in ROI Analysis
Real ROI = Your return - Alternative return. If you made 7% but S&P 500 made 12%, you actually lost 5% annually in opportunity cost. Money would've grown faster elsewhere. Always compare to realistic alternatives.
Factor in Time and Effort for True ROI
Active real estate investing might return 15% but requires 10 hours/week. That's 520 hours/year. If you earn $50/hour elsewhere, that's $26,000 opportunity cost. Net ROI might be lower than passive index fund investing.
Reinvest Gains for Compound Returns
Taking profits prevents compounding. A rental property generating $15,000/year reinvested at 8% creates $64,000 over 10 years vs. $150,000 if spent. Reinvestment turns 15% annualized into 18%+ through compounding.
Calculate ROI Before Making Investment
Project expected ROI before committing money. Real estate: estimate rents, expenses, appreciation, sale costs. Business: forecast revenue, costs, timelines. Required ROI should exceed 8-10% to beat passive investing alternatives.
Higher ROI Usually Means Higher Risk
20%+ ROI investments typically carry significant risk - market volatility, business failure, liquidity issues. Stable 6-10% returns often better long-term than chasing 25% with high failure risk. Balance ROI targets with risk tolerance.
Track ROI Across Entire Portfolio
Individual investment ROI matters less than portfolio ROI. You might have 3% bond returns, 12% stock returns, -5% crypto losses. Overall portfolio ROI is weighted average - this number determines wealth building success.
Don't Chase Past Performance
High historical ROI doesn't predict future returns. Stock that returned 50% last year might lose 20% next year. Real estate market that appreciated 15% annually might crash. Use conservative projections for future ROI expectations.
Common Mistakes to Avoid
Ignoring Time Factor in ROI Calculations
100% ROI over 10 years (7. 2% annually) is actually worse than 50% ROI over 3 years (14. 5% annually).
✓ Better approach: Always annualize returns or you'll misjudge performance. Time is critical variable - a year of poor returns in your 20s costs decades of compound growth.
Forgetting to Include All Costs
Real estate ROI isn't just purchase price. Add closing costs, renovation, property tax, insurance, maintenance, HOA, vacancy costs, management fees.
✓ Better approach: Missing $30,000 in hidden costs turns 20% ROI into 12% ROI.
Not Counting All Income Sources
Stock ROI isn't just price appreciation. Include dividends, special distributions, spin-offs.
✓ Better approach: Rental property includes rent, tax benefits, appreciation, principal paydown. Missing income understates true ROI by 20-50%.
Comparing Pre-Tax Returns
8% return in taxable account (6% after 25% tax) is worse than 6. 5% in Roth IRA (6. 5% after-tax). 12% short-term gains (7-9% after taxes) beat 10% long-term gains (8-8.
✓ Better approach: 5% after taxes)? No. Always compare after-tax ROI.
Using Unrealistic Assumptions
Assuming 20% annual stock returns or 10% real estate appreciation leads to disappointment. Use historical averages: 10% stocks, 7-8% after inflation.
✓ Better approach: 3-5% real estate appreciation. Conservative projections prevent overextension based on optimistic ROI projections.
Ignoring Liquidity and Access to Capital
15% ROI on rental property sounds great until you need money and can't access it for 3 months (or lose 8% to quick sale). 10% ROI in liquid stocks might be better - you can access capital anytime.
✓ Better approach: Consider liquidity in ROI analysis.
Calculating ROI on Unrealized Gains
Paper gains aren't real until sold. Stock showing 50% gain could drop 30% before you sell.
✓ Better approach: Calculate and brag about ROI only on realized (sold) investments. Unrealized ROI useful for tracking, but not spending planning.
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Frequently Asked Questions
What is ROI (Return on Investment)?
ROI measures how much profit you made relative to your initial investment. It's calculated as: (Final Value - Initial Investment) ÷ Initial Investment × 100%. For example, investing $10,000 that grows to $15,000 is a 50% ROI.
What is the difference between ROI and annualized return?
ROI is total return regardless of time period. Annualized return adjusts for time, showing average yearly return. A 50% ROI over 10 years is much worse than 50% over 1 year. Annualized return lets you compare investments held for different time periods.
What is a good ROI for investments?
S&P 500 historical average: 10% annually. Good stock portfolio: 8-12%. Conservative portfolio (bonds): 4-6%. Real estate: 8-12%. Anything beating 7-8% annually is solid. Remember: higher returns = higher risk. Beware of "guaranteed" high returns - likely a scam.
How do I calculate ROI on stocks with dividends?
Include dividends in your final value. Formula: [(Final Stock Value + Total Dividends Received) - Initial Investment] ÷ Initial Investment × 100%. Dividends significantly boost total return, especially when reinvested.
What is CAGR vs simple ROI?
Simple ROI: total return without considering time. CAGR (Compound Annual Growth Rate): smoothed annual return accounting for compounding. CAGR is better for comparing multi-year investments. A 100% ROI over 10 years = 7.2% CAGR, not 10%.
Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.