Return on investment (ROI) calculator

Enter what you put in, what you got back and how long it took to see total ROI, profit and the annualised return.

How this calculator works

Return on investment compares the profit with the amount invested: a $5,000 investment worth $8,000 has a $3,000 profit and a 60% ROI. That figure is easy to understand but hard to compare — 60% over five years is a very different result from 60% over five months. The annualised return (compound annual growth rate) puts every investment on the same per-year scale, which is why professionals use it.

The calculator assumes no additional money went in or out during the period and that the final value includes any dividends or income received. For a project rather than a market investment, use the total cost as “amount invested” and the total revenue as “amount returned”. Negative results are possible: if the final value is below the initial amount, both ROI and the annualised return come out negative.

The formula

Total ROI = (final − initial) ÷ initial × 100. Annualised return (CAGR) = (final ÷ initial)^(1/years) − 1.

CAGR is the constant annual rate that would turn the starting amount into the ending amount over the period. It smooths out year-to-year volatility, which is both its strength and its limitation.

Worked example

Investing 5,000 and ending with 8,000 after 5 years gives a total return of 60.00%, a profit of $3,000.00, and an annualised return of 9.86% a year.

Common mistakes

• Ignoring the time period. 60% over one year and 60% over ten years are opposite ends of the spectrum, but the plain ROI number looks identical.
• Leaving out costs. Fees, commissions and taxes reduce the real return. Use the net amount you actually received as the final value.
• Comparing CAGR with simple average returns. If an investment returns +50% then −50%, the average annual return is 0% but the money is down 25%. CAGR captures the compounding reality; arithmetic averages do not.