How to Use This Calculator
- Enter your initial investment — total amount you invested
- Enter the final value — current or exit value of investment
- Enter investment duration in years for annualized return
- Optionally add additional costs like fees or taxes
- Get instant ROI, net profit, and annualized return
ROI Formula Explained
ROI is one of the simplest and most widely used financial metrics. Here are the two formulas used in this calculator:
ROI = (Net Profit / Cost of Investment) × 100
Net Profit = Final Value − Initial Investment − Additional Costs
ROI = Result as a percentage
Annualized ROI = ((1 + ROI/100)^(1/years) - 1) × 100
years = Duration of investment in years
Allows fair comparison between investments of different durations
ROI Examples
| Investment | Cost | Final Value | ROI |
|---|---|---|---|
| Stock Purchase | $5,000 | $7,500 | +50% |
| Real Estate | $100,000 | $140,000 | +40% |
| Business | $20,000 | $18,000 | -10% |
| Crypto Trade | $1,000 | $3,200 | +220% |
What is a Good ROI?
By Investment Type
| Investment Type | Good Annual ROI |
|---|---|
| Savings Account | 3–5% |
| Stock Market (index) | 7–10% |
| Real Estate | 8–12% |
| Small Business | 15–25% |
| Crypto (high risk) | 20%+ (with high volatility) |
ROI vs Other Metrics
ROI vs ROE
ROI measures return on total investment cost. ROE (Return on Equity) measures return relative to shareholder equity — used specifically for evaluating company financial performance.
ROI vs IRR
ROI is simple and snapshot-based. IRR (Internal Rate of Return) accounts for the time value of money and is more accurate for long-term multi-cash-flow investments like real estate or business projects.
ROI vs Annualized ROI
A 50% ROI over 10 years sounds great but annualizes to only 4.1% per year — below stock market average. Always compare annualized ROI when evaluating investments of different durations.
Frequently Asked Questions
ROI stands for Return on Investment. It measures the profitability of an investment as a percentage of the original cost. A positive ROI means you made money. A negative ROI means you lost money relative to what you invested.
A good ROI depends on the investment type and risk level. For stocks, 7-10% annually is considered solid. For real estate, 8-12% is typical. For businesses, 15-25% is healthy. Higher risk should always be compensated with higher potential ROI.
ROI = (Net Profit / Cost of Investment) × 100. Net Profit equals the final value minus the initial investment and any additional costs like fees or taxes. The result is expressed as a percentage.
Annualized ROI converts your total ROI into a yearly rate, making it possible to fairly compare investments held for different durations. Formula: Annualized ROI = ((1 + ROI/100)^(1/years) - 1) × 100.
ROI measures return relative to the total investment cost and applies to any investment. ROE (Return on Equity) measures return relative to shareholders equity and is specifically used to evaluate company or stock performance.