Investment ROI Calculator
Calculate your Return on Investment (ROI) and annualized return. Simple and effective.
Return on investment (ROI) is the most universal way to measure whether money you put in actually paid off — but a raw percentage can be deceptive if it ignores how long the investment took. This calculator gives you both: the simple ROI that compares your gain to your cost, and the annualized return that puts investments of different durations on equal footing so you can compare them honestly.
It works for almost anything you can buy and later sell or earn from: stocks, real estate, a small-business project, a marketing campaign, or even a course you took to boost your income. By separating the headline return from the time-adjusted return, the tool helps you avoid the classic trap of being impressed by a big percentage that actually took a decade to earn, or overlooking a modest-looking gain that arrived in a single year.
Plug in some numbers —
we'll crunch.
How to use
- 1Enter the amount you initially invested.
- 2Enter the current or final value of the investment.
- 3Enter how many years the investment ran.
- 4Get total ROI percentage and the annualized CAGR.
How it works
Simple ROI is the ratio of profit to cost: ROI = (Final Value − Initial Cost) ÷ Initial Cost × 100. A $1,000 investment that becomes $1,300 has a 30% ROI. It is intuitive but blind to time — a 30% return is excellent in one year and mediocre over ten.
Annualized return fixes that by expressing the gain as a constant yearly growth rate: Annualized = (Final ÷ Initial)^(1 ÷ years) − 1. This is the compound rate that, applied each year, would turn your initial amount into the final amount. It is the only fair way to compare, say, a property held for seven years against a stock held for two, because it answers "how hard did my money work per year?" rather than "how much did it grow in total?"
Worked examples
A simple stock gain
You invest $5,000 and sell three years later for $7,500.
- Profit = 7,500 − 5,000 = $2,500.
- Simple ROI = 2,500 ÷ 5,000 = 50%.
- Annualized = (7,500 ÷ 5,000)^(1/3) − 1 ≈ 14.5% per year.
A 50% total return sounds huge, but it works out to about 14.5% per year — strong, yet far more comparable to other investments once time is accounted for.
Comparing two investments fairly
Investment A returns 40% over 5 years; Investment B returns 18% over 2 years.
- A annualized = 1.40^(1/5) − 1 ≈ 7.0% per year.
- B annualized = 1.18^(1/2) − 1 ≈ 8.6% per year.
Even though A's headline 40% dwarfs B's 18%, B actually earned a higher annual rate. Without annualizing, you would pick the worse investment.
Tips & common mistakes
Always factor in costs and fees. Trading commissions, management fees, taxes on gains, and transaction costs all eat into your true ROI. A 'gross' return that ignores them flatters the result; the number that matters is what actually lands in your pocket after everything is paid.
Be careful comparing ROIs of different durations — this is the single most common mistake. A 100% return is spectacular in one year and unremarkable over twenty. Whenever the time horizons differ, convert to an annualized figure before you compare, or you will systematically favor older, slower investments.
Remember that ROI looks backward and says nothing about risk. A high past return may reflect a lucky bet or a volatile asset that could just as easily have lost money. For a complete picture, weigh the return against how much risk you took to earn it. This tool is for educational comparison, not investment advice — consult a qualified advisor before committing real money.
Frequently asked questions
⚠ For informational purposes only. Does not account for taxes, fees, or dividends reinvested.
Last reviewed: June 2026
About this calculator
Calculate your Return on Investment (ROI) and annualized return. Simple and effective.