How this ROI calculator works
Return on investment (ROI) tells you how much money an investment made or lost relative to its cost. Because it is expressed as a percentage, you can compare a small purchase against a large one on equal footing. This calculator takes the amount you invested and the amount you got back and reports both the ROI percentage and the net profit in dollars.
The formula is simple: ROI % = (returned − invested) ÷ invested × 100. The piece in brackets is your net profit — what you got back minus what you put in. Dividing by the original cost scales that profit to the size of the investment, and multiplying by 100 turns it into a percentage. A negative result means the investment lost money.
A raw ROI ignores time, so a 30% return over ten years is treated the same as 30% in a single year. To fix that, add a holding period and the tool computes the annualized ROI (CAGR) — the steady yearly rate that would grow your investment to its final value: ((returned ÷ invested)1 ÷ years − 1) × 100. Periods entered in months are converted to years by dividing by 12.
Reference note: these figures are simple ROI math and do not account for taxes, fees, dividends, additional contributions, inflation, or risk. Results are an estimate, not financial advice.
Frequently asked questions
- What is ROI?
- ROI, or return on investment, measures how much you gained or lost relative to what you put in. It is expressed as a percentage of the original cost, which makes it easy to compare investments of different sizes.
- How is ROI calculated?
- ROI percent equals the net gain divided by the cost, times 100. The net gain is the amount returned minus the amount invested. For example, a $300 gain on a $1,000 investment is 300 / 1000 = 0.30, or a 30% ROI.
- What is a good ROI?
- There is no single good number because it depends on the asset, the time period, and the risk taken. A higher ROI is generally better, but a return earned over many years is not comparable to the same return earned in one year. Annualized ROI helps make that comparison fairer.
- What is annualized ROI or CAGR?
- Annualized ROI, also called the compound annual growth rate (CAGR), is the steady yearly rate that would turn the amount invested into the amount returned over the holding period. It is ((returned / invested) raised to the power of 1 divided by the number of years) minus 1, times 100.
- Can ROI be negative?
- Yes. If the amount returned is less than the amount invested, the net gain is negative and the ROI is negative, which represents a loss. For example, getting back $800 on a $1,000 investment is a -20% ROI.
- Is this financial advice?
- No. This calculator is an informational tool that performs basic ROI math. It does not account for taxes, fees, inflation, or risk, and it is an estimate, not financial advice. Consult a qualified professional before making investment decisions.