ROI Calculator
Return on investment for any outlay — with the annualized rate beside it, because a 60% gain over two years and the same gain over twenty are not the same investment.
The address carries whatever you changed, so anyone opening it sees these numbers. Nothing is saved on our side.
Return on investment
48.1%
$27,000 in, $40,000 back — a profit of $13,000, which works out at 8.18% a year.
- $27,000
- Purchase plus costs
- $13,000
- 8.18%
- Compound rate per year
- 1.48×
- For every dollar in
The same ROI, over different periods
ROI is a ratio, not a rate. Doubling your money is a fine result in two years and a poor one in twenty, and the ratio cannot tell them apart — which is why the annualized figure sits beside it.
| Held for | Total return | Annualized |
|---|---|---|
| 1 year | 48.1% | 48.15% |
| 2 years | 48.1% | 21.72% |
| 3 years | 48.1% | 14% |
| 5 yearsyours | 48.1% | 8.18% |
| 10 years | 48.1% | 4.01% |
How this calculator works
A ratio and a rate, because either one alone is misleading.
net profit = returned − invested
ROI = net profit ÷ invested
annualized = (returned ÷ invested)1/years − 1
“Invested” is the purchase price plus every additional cost, which is why there is a separate field for them. The annualized figure is a compound rate, not the ROI divided by the years — dividing understates a long hold and overstates a short one.
What is assumed
- Everything went in at the start and came back at the end. An investment funded in instalments needs an IRR instead.
- Income received along the way is lumped into the amount returned rather than compounded from when it arrived.
- No tax is deducted, on the gain or the income.
A worked example
$25,000 invested, $2,000 in fees and improvements, sold for $40,000 five years later.
| Amount invested | Purchase price |
|---|---|
| Additional costs | Fees and improvements |
| Total invested | Everything it cost |
| Total returned | Sale proceeds |
| Net profit | 40,000 − 27,000 |
| ROI | 13,000 ÷ 27,000, or 8.18% a year |
Leaving the $2,000 of costs out would report 60% instead of 48.15% — a difference of nearly twelve percentage points on the same investment. Costs are not a rounding item.
Questions people ask
Everything the investment cost you, not just the purchase price. Commissions, fees, legal costs, renovation, shipping — if you would not have spent it without the investment, it belongs in the total. Leaving costs out is the most common way an ROI ends up overstated.
Everything it gave back: the sale proceeds plus any income along the way — rent, dividends, interest, coupons. If the investment has not been sold, use what you could sell it for today, and treat the result as unrealized.
Because ROI has no time in it. Turning $25,000 into $40,000 is a 60% return whether it took one year or twenty — but one is an outstanding investment at 60% a year and the other is a mediocre one at 2.4%. The ratio alone cannot distinguish them, and comparing two investments on ROI without their holding periods is close to meaningless.
The arithmetic is the same, but businesses often mean something narrower — return on a specific campaign, or on capital employed, with a defined denominator. The formula here is the general one: net profit divided by what it cost. If you are reporting to someone who has a definition in mind, check which denominator they expect.
Enter today's market value as the amount returned and be clear that the result is on paper. Nothing is realized until you sell, and selling usually costs something — fees, spread, and often tax on the gain — which the ROI as calculated here does not deduct.
Related calculators
A measure of a result you already have. It deducts no tax and assumes the figures you enter are complete.