ROI Calculator (Return on Investment)
Calculate the percentage return on an investment, plus the annualized return if you held the investment for more than one year.
Formula & methodology
Total ROI is calculated as ROI (%) = (Final Value − Initial Investment) / Initial Investment × 100. When a holding period in years is provided, the annualized ROI is also calculated as ((Final Value / Initial Investment)^(1/years) − 1) × 100, which lets you fairly compare investments held for different lengths of time.
Source: Investopedia: Return on Investment (ROI)
Worked example
Example: an investment of $8,000 that grows to $11,200 over 3 years has a total ROI of 40% and an annualized ROI of about 11.9% per year.
Frequently asked questions
- Why does annualized ROI matter?
- A 40% return over 1 year is very different from a 40% return over 10 years. Annualized ROI normalizes the result per year so you can compare investments with different holding periods fairly.
- Does this account for taxes or fees?
- No. This is a gross return calculation. Taxes, transaction fees, and inflation will reduce your real, take-home return.
Practical tips
- Always compare investments using annualized ROI, not total ROI, when the holding periods differ — a 20% return in 1 year is far better than a 20% return spread over 5 years.
- Include all costs in your initial investment figure (fees, closing costs, taxes paid to acquire the asset) — leaving them out inflates your ROI artificially.
Results are estimates for general informational purposes only and do not constitute financial, tax, or legal advice. Always confirm important figures with a qualified professional or your lender before making a financial decision.