Return On Investment Calculator - ROI

What this ROI calculator works out

You put money into something. Some time passed. Now it is worth a different amount, and you want to know whether that was a good idea or whether you just got lucky and slow.

That is the whole question ROI answers. Return on Investment. How much you got back, compared to what you put in.

Give this calculator four things and it hands back four numbers: your gain or loss in plain money, how long you held it in years, months and days, your total ROI as a percentage, and that same return rewritten as a per year rate.

The last one is the interesting one. We will spend a good part of this page on it, because it is the number that stops you from making a bad comparison.

Filling in the four boxes

1. Original investment. Everything you put in. Not just the sticker price. If you paid brokerage, stamp duty, legal fees or a renovation bill, those are part of what the thing cost you.
2. Investment start date. The day the money actually left your hands.
3. Returned value. Everything you got back, or everything it is worth today. Sale price, plus any dividends, interest or rent you collected along the way, minus what it cost you to sell.
4. Investment end date. The day you sold, or today if you are still holding.

Then press Calculate.

Both amounts have to be in the same currency. The calculator does not know or care whether you are typing rupees, dollars or pesos. It divides one by the other, so as long as both are the same thing, the percentage comes out right.

The two formulas doing the work

Total ROI

This one is old and simple and has not changed in a very long time.

ROI = ((Returned value - Original investment) / Original investment) × 100

Put in 100, get back 130, and your ROI is 30 percent. Nothing hiding in there.

Annualized ROI

This is the one that does the actual work.

Annualized ROI = ((1 + ROI / 100)^{(1 / n)} - 1) × 100

That fractional exponent is doing something specific. It asks: what steady yearly rate, compounding on itself, would have taken me from where I started to where I ended up?

Which makes this a compound rate, not an average. If you simply divide your total ROI by the number of years you get a different and slightly flattering number. We do not do that. This is the same quantity that goes by CAGR, compound annual growth rate, in most other places, and you can check it against our CAGR calculator if you like.

Why 50 percent can be worse than 20 percent

Here is the trap, and almost everyone falls into it at least once.

Say you are looking at two things you could have done with 100,000.

A made you 50 percent. B made you 20 percent. If you stopped reading at that row, A wins and it is not close.

But A took five years to do it and B took two. Per year that your money was tied up, B did better. Not by a huge margin, but it did, and the total ROI row tells you the exact opposite.

Total ROI has no clock in it. That is the thing to remember about it, and annualizing is how you put the clock back. So the rule is boring and worth keeping. Compare total ROI only when the holding periods match. Otherwise compare the annualized figure.

How your two dates become a number of years

Now, this is the part most calculators do not tell you, and it is exactly the part that decides your annualized number. So here it is.

You give us two dates. We have to turn that gap into a decimal number of years before we can raise anything to the power of one over it. There is more than one way to do that, and ours is this:

n = whole years + (whole months / 12) + (leftover days / 365)

We walk the calendar first. Years, then months, then days, the way you would count it out loud. Then we convert the leftovers. Every whole month counts as one twelfth of a year, whether that month was February or August, and leftover days are divided by 365.

Does the method matter? Usually it moves the annualized figure by about a hundredth of a percentage point. In the worked example below ours gives 10.07 percent, while counting elapsed days and dividing by 365 gives 10.06 percent. Over a hold of several years that is noise.

It stops being noise on short holds, because annualizing squeezes a small period up into a full year and multiplies any wobble along with it. Which brings us to the next bit.

A note on holding periods under a year

The Global Investment Performance Standards, the professional rulebook that investment firms follow when they report performance to clients, say plainly that returns for periods of less than one year must not be annualized. The reasoning is simple enough. Turning six weeks of performance into a yearly figure quietly assumes the next forty six weeks will behave the same way, and there is nothing backing that assumption up.

The calculator will give you the number if you ask for it. Just read it as arithmetic rather than as a forecast.

A worked example: a plot bought in 2021

Lets do a real one and follow every step, so you can check our arithmetic against your own.

You bought a small plot for 250,000 on 10 April 2021. You sold it for 415,000 on 22 July 2026.

Step 1: the gain

415,000 minus 250,000 is 165,000.

Step 2: the term

From 10 April 2021 to 22 July 2026 is 5 years, 3 months and 12 days. As a decimal that is 5 + (3 / 12) + (12 / 365), which comes to 5.2829 years.

Step 3: total ROI

165,000 divided by 250,000 is 0.66. Times 100 gives 66 percent.

Step 4: annualized ROI

Now we ask what steady yearly rate would turn 250,000 into 415,000 over 5.2829 years. (1 + 0.66) raised to the power of (1 / 5.2829) is 1.1007. Subtract 1, multiply by 100, and you get 10.07 percent a year.

So the plot returned 66 percent in total, which works out to a little over 10 percent a year compounded. Now you have a number you can hold up against a fixed deposit, a mutual fund, or the shop you almost bought instead.

Two quick ways to sanity check it

The first is the multiple. Divide the returned value by the original and you get 415,000 divided by 250,000, which is 1.66x. Your money became one and two thirds of itself. That should feel consistent with a 66 percent ROI, because it is the same fact said twice.

The second is the rule of 72. Divide 72 by your annualized rate and you get roughly how many years it takes to double. 72 divided by 10.07 is about 7.2 years. Since you held for 5.3 years and did not quite double, that lines up. If the rule of 72 tells you something wildly different from what you are looking at, you have probably typed a date wrong.

About the rounding

You may notice the tool shows 66 rather than 66.00. Here is what it does. Results larger than 1 are rounded to two decimal places with trailing zeros dropped, so 66.00 shows as 66 and 10.0686 shows as 10.07. Results smaller than 1 are shown to two significant figures instead, so a return of 0.004567 percent appears as 0.0046 rather than rounding away to 0.00. Small returns stay readable that way.

The same two boxes, four different things

ROI gets applied to almost anything with a cost and a payoff. Shares, property, a marketing budget, a machine on a factory floor. The formula never changes. What changes every single time is what belongs in each box.

So here are four, worked out properly.

Shares

You bought 90,000 worth and paid 350 in brokerage getting in. Over the hold you collected 3,200 in dividends. You sold for 122,000 and paid 470 getting out.

Original investment is 90,350. Returned value is 122,000 plus 3,200 minus 470, which is 124,730. That is a gain of 34,380 and an ROI of 38.05 percent.

Type in 90,000 and 122,000 instead, forgetting the dividends and the brokerage, and you get 35.56 percent. Two and a half points of your actual return, gone, mostly because the dividends never made it into the box.

A rental property

Bought for 4,000,000. Registration and legal came to 260,000, and you spent 180,000 on repairs before the first tenant moved in. Over the years you collected 720,000 in rent after maintenance and property tax. You sold for 5,300,000 and the agent took 130,000.

Original investment is 4,440,000. Returned value is 5,300,000 minus 130,000 plus 720,000, which is 5,890,000. ROI is 32.66 percent.

If rental yield is the question rather than the whole life of the deal, our cap rate calculator and cash on cash return calculator are built for exactly that.

A marketing campaign

You spent 5,000 on ads and the campaign brought in 15,000 in sales. Tempting to call that 300 percent and go home. But those sales cost you 8,000 to make and ship.

Your gain is 15,000 minus 8,000 minus 5,000, which is 2,000. So you type 5,000 as the original investment and 7,000 as the returned value, and the ROI is 40 percent. A long way from 300.

If you specifically want revenue against ad spend, that is a different and sometimes more useful question, and the ROAS calculator answers it.

A machine that did not pay off

A machine cost 850,000, plus 95,000 to install it and train people on it. Over three years it saved 480,000 in work you would otherwise have outsourced, and you sold it on for 300,000.

Original investment is 945,000. Returned value is 480,000 plus 300,000, which is 780,000. ROI is minus 17.46 percent.

Negative results are perfectly normal and the calculator handles them. Worth noting that the resale value counts. Leave it out and the same machine looks like minus 49 percent, which would be a much harsher verdict than it deserves.

Where the ROI number usually goes wrong

The formula is not the hard part. Two divisions and a multiplication. A calculator is honestly overkill for it.

The hard part is deciding what counts as cost and what counts as gain. This is where two people looking at the same investment produce wildly different ROI numbers, both of them convinced they did it right. Three habits fix most of it.

Revenue is not gain

The marketing example above is the classic. Money coming in is not profit until you subtract what it cost to earn it. Putting revenue in the top of the formula is the single most common way an ROI gets inflated, and it usually happens by accident rather than by anyone lying.

Cost means everything the thing cost you

For property that is the purchase price plus registration, legal fees, brokerage, the repairs you did before letting it, and the property tax you paid while holding it. For shares it is brokerage and transaction taxes on both sides. For a business it is the working capital you tied up, not only the equipment you bought. Leave those out and your ROI is a story rather than a measurement.

Be consistent when you compare

If you are putting two investments side by side, define cost and gain the same way for both. Comparing a fully loaded ROI against a napkin ROI is worse than not comparing at all, because it feels rigorous while being nonsense.

So what counts as a good ROI?

Everyone wants a single number here and there is not one. But there is a proper way to ask the question, and it is the way analysts actually do it.

You compare your ROI against a limit value. Something you decide beforehand that the investment has to clear. Then:

• ROI at or above the limit, the investment is worth doing
• ROI below the limit, it is not

All the thinking is in choosing that limit. There are three usual choices, and they get stricter as you go down.

Zero. The loosest possible bar. You made money or you did not. Fine when you genuinely had no other option for that cash, which is rarer than people think.

What you would otherwise have earned. Usually the honest one for personal money. If a fixed deposit would have paid you 7 percent a year with far less trouble, then 7 percent is your bar, and a 9 percent annualized return is a modest win rather than a triumph. Inflation belongs in here too. Growing 4 percent a year while prices rose 6 percent means the number went up and your buying power went down.

Your cost of capital. What businesses use. If you borrowed at 12 percent to fund something that returned 10, you funded a loss no matter how positive the ROI looked. The WACC calculator works this out when the money came from a mix of debt and equity.

Pick the limit before you run the numbers, not after. Picking it afterwards has a way of landing wherever it needs to for the answer to be yes.

What your number is and is not telling you

A percentage on its own means nothing. It only means something next to something else. A few things to hold in mind when you read yours.

It is a nominal figure, before tax. Capital gains treatment varies by country, by asset, and by how long you held, and the gap between a pre tax and post tax return can be wide. For the inflation adjusted version, run the annualized figure through our real rate of return calculator along with the inflation over the same period.

It measures return, not risk. Two investments can show the same annualized ROI while one of them could have wiped you out along the way and the other could not. ROI cannot see volatility, it cannot see how close you came to losing the lot, and it will not warn you. If risk is the real question, the Sharpe ratio calculator is a better place to look.

A negative annualized figure on a short hold looks worse than the reality. Lose 20 percent in six months and the annualized number lands around minus 36 percent, because the maths assumes you keep losing at that pace for another six months. Correct arithmetic, terrible prediction.

And the obvious one, said once. This is a calculator, not advice. It knows nothing about your situation, your tax position, or what you can afford to lose. For anything that actually matters, talk to someone qualified where you live.

When a different measure fits the question better

First, the naming problem

Several different things get called return on investment, and they are not the same calculation. Return on equity uses only the owner's capital. Return on capital employed uses equity plus long term debt. Return on assets uses the whole balance sheet. Average rate of return and earnings per share get thrown into the same conversation too.

What this page calls ROI is the simple one: total money back against total money in, over a stated period. When someone quotes you an ROI, it is always worth asking which one they mean and how they worked it out. Ours is written out in full above so you never have to ask us.

And when to reach for something else

• Money going in and out over time. ROI compares one starting value to one ending value. If you were topping up a fund every month, or pulling cash out along the way, IRR or XIRR is the measure that handles a stream of dated cash flows.
• Projects with cash flows landing in different years. Try the discounted cash flow calculator or the profitability index calculator. ROI treats a rupee arriving in year seven the same as a rupee today, and it is not the same rupee. Our present value calculator shows you exactly how much they differ by.
• How long until you get your money back. That is the payback period, and it is a different question from how much you made.
• A single holding period on a security, with income included. The holding period return calculator is set up for that shape.

One more time

You put in an amount. You got back an amount. The difference, divided by what you put in, times 100, is your total ROI.

Because that number has no clock in it, we take your two dates, work out how many years passed, and ask what steady yearly rate would have produced the same result. That is your annualized ROI, and it is the one you compare across investments of different lengths. We build the year count as whole years, plus months over twelve, plus leftover days over 365.

Then the number is only ever as good as what you fed it. Get the cost right, get the gain right, pick your limit value before you look at the answer, and remember that ROI is silent on tax, inflation and risk.

Hope this makes the figure on your screen a bit less mysterious. If you spot something wrong here, or a case we have not handled, do tell us. We would much rather fix it than have you trusting a wrong number.

Questions people ask

What is a good ROI?

There is no single answer, and anyone who gives you one is selling something. A good ROI is one that clears the limit value you set beforehand, whether that is zero, what a safe alternative would have paid you, or your cost of capital. All three change depending on where you live and when you are asking.

Why is my annualized ROI lower than my total ROI divided by the years?

Because of compounding. Earn 10 percent in year one and year two earns 10 percent on a bigger base. Working backwards, the steady rate that produces a given total is always a little lower than the simple average. A 50 percent total over 5 years is 8.45 percent annualized, not 10 percent.

Is ROI the same as rate of return?

Close, but not identical. Rate of return usually carries a period with it, most often a year. ROI as commonly used carries no period at all, which is exactly why we annualize it here.

Can ROI be more than 100 percent?

Yes. An ROI of 100 percent means you doubled your money. 300 percent means you got back four times what you put in. There is no ceiling on it.

Does this calculator handle monthly SIP contributions?

No. It compares a single starting value against a single ending value. For regular contributions you want XIRR, which takes a stream of dated cash flows rather than two points.

Does the currency matter?

Not to the maths, as long as both amounts use the same one. The result is a ratio, so the currency cancels out.

Should dividends and rent go in the returned value?

Yes. Anything the investment paid you while you held it is part of what you got back. Leave it out and you understate your return, sometimes badly, as the shares example above shows.

References

A note on where the figures and rules on this page come from. The instruction not to annualize periods shorter than a year is not our house style, it is a requirement of the professional performance reporting standard maintained by CFA Institute. The compounding mechanism behind the annualized formula follows the standard definition published by the US Securities and Exchange Commission's investor education office. The treatment of ROI as a first pass measure to be checked against a limit value, and its place alongside net present value and internal rate of return, follows the standard corporate finance text by Brealey, Myers and Allen.

1. CFA Institute, Global Investment Performance Standards (GIPS) for Firms, 2020 edition, provisions on calculation methodology. https://www.gipsstandards.org/wp-content/uploads/2021/03/2020_gips_standards_firms.pdf
2. CFA Institute, Overview of the Global Investment Performance Standards. https://www.cfainstitute.org/insights/professional-learning/refresher-readings/2026/overview-of-the-global-investment-performance-standards
3. U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, Compound Interest, Investor.gov glossary. https://www.investor.gov/introduction-investing/investing-basics/glossary/compound-interest
4. U.S. Securities and Exchange Commission, Compound Interest Calculator, Investor.gov. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
5. Cornell Law School, Legal Information Institute, Compound interest, Wex legal dictionary. https://www.law.cornell.edu/wex/compound_interest
6. Brealey, R.A., Myers, S.C., and Allen, F., Principles of Corporate Finance, McGraw-Hill Education.