ROI Calculator
Calculate return on investment for stocks, real estate, business projects, and more. See both total ROI and annualized returns.
--
--
--
Investment Summary
ROI = ($0 - $0) ÷ $0 × 100 = 0.00%
Quick Answer: ROI Formula
ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. A positive ROI means profit; negative ROI means loss.
Dr. Snezana Lawrence
Mathematical Historian
15+ years experience
PhD from Yale University. Published mathematical historian ensuring precision in all calculations.
Education
PhD in Mathematical History - Yale University
Table of Contents
What is ROI?
ROI (Return on Investment) is a financial metric that measures the profitability of an investment. It shows how much return you get relative to the cost of the investment, expressed as a percentage.
ROI is used to evaluate investments, compare different opportunities, and measure business performance. A higher ROI indicates a more profitable investment.
Positive ROI
Investment made a profit. ROI > 0% means you earned more than you invested.
Zero ROI
Break-even point. ROI = 0% means you got back exactly what you invested.
Negative ROI
Investment lost money. ROI < 0% means you lost part of your investment.
ROI Formula & Examples
Basic ROI Formula
ROI = ((Final Value - Initial Investment) / Initial Investment) × 100
Example: Stock Investment
Buy stock for $1,000, sell for $1,500
ROI = ($1,500 - $1,000) / $1,000 × 100 = 50%
Example: Real Estate
Buy property for $200,000, sell for $260,000
ROI = ($260,000 - $200,000) / $200,000 × 100 = 30%
Annualized ROI Explained
Annualized ROI (also called CAGR - Compound Annual Growth Rate) converts total return to an annual rate, allowing fair comparison of investments with different time horizons.
Annualized ROI Formula
Annualized ROI = ((Final / Initial)1/years - 1) × 100
Example Comparison
Investment A: 50% total return over 5 years = 8.45% annualized
Investment B: 30% total return over 2 years = 14.02% annualized
Investment B had better annual performance despite lower total return!
Frequently Asked Questions
What is a good ROI percentage?
A good ROI varies by investment type. Stock market averages 7-10% annually. Real estate typically yields 8-12%. A 15%+ ROI is generally considered excellent. Always compare ROI to alternative investments and account for risk.
How do you calculate ROI?
ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. For example, invest $1,000, get back $1,200: ROI = ($1,200 - $1,000) / $1,000 × 100 = 20%.
What is annualized ROI?
Annualized ROI converts total return to an annual rate, allowing fair comparison of investments with different time periods. It accounts for compounding and shows average yearly performance.
Does ROI account for risk?
No, basic ROI doesn't account for risk. High-risk investments may show higher ROI but could also result in losses. Consider risk-adjusted returns like Sharpe ratio for a complete picture.
What's the difference between ROI and ROE?
ROI measures return on total investment. ROE (Return on Equity) specifically measures return on shareholders' equity in a company. ROE is commonly used to evaluate corporate profitability.
Related Calculators
Interest Calculator
Calculate simple and compound interest
Compound Interest Calculator
Calculate investment returns with compounding
Percentage Calculator
Calculate percentages and ratios
Discount Calculator
Calculate final prices after discounts
Markup Calculator
Calculate markup percentages
Mortgage Calculator
Calculate mortgage payments and interest
Dr. Snezana Lawrence
Mathematical Historian | PhD from Yale
Dr. Lawrence is a published mathematical historian with a PhD from Yale University. She ensures mathematical precision and accuracy in all our calculations, conversions, and academic score calculators. Her expertise spans computational mathematics and educational assessment.
View LinkedIn Profile