ROI Calculator
Calculate your return on investment. Enter the cost and final value to see ROI percentage, net profit, and annualized return.
How ROI is calculated
Basic ROI Formula
ROI = ((Final Value − Initial Cost) / Initial Cost) × 100
If you invest $10,000 and it grows to $13,000, your ROI is 30%.
Annualized ROI Formula
Annualized = ((1 + ROI/100)^(1/years) − 1) × 100
A 30% total return over 3 years equals roughly 9.14% annualized — useful for comparing investments of different durations.
Common ROI benchmarks
S&P 500: ~10% average annual return (before inflation)
Real estate: 8–12% annual return including appreciation and rental income
Bonds: 4–6% annual return for investment-grade bonds
Savings account: 4–5% APY for high-yield accounts (as of 2024)
Small business: 15–25%+ ROI is often expected to justify the risk
Frequently asked questions
What is ROI and how is it calculated?
ROI (Return on Investment) measures the profitability of an investment as a percentage. It is calculated as: ROI = ((Final Value - Initial Cost) / Initial Cost) × 100. A positive ROI means profit, while a negative ROI means a loss.
What is a good ROI percentage?
A 'good' ROI depends on context. The S&P 500 historically returns about 10% per year on average. Real estate typically targets 8-12%. A business investment often aims for 15-25% or higher to justify the risk. Always compare ROI against alternative investments and inflation.
What is the difference between ROI and annualized ROI?
ROI shows total return over the entire investment period, while annualized ROI normalizes the return to a per-year basis. Annualized ROI lets you compare investments held for different lengths of time on an equal footing.
Does ROI account for inflation or taxes?
Basic ROI does not account for inflation, taxes, or fees. For a more accurate picture, subtract taxes and fees from your final value before calculating, and consider the real (inflation-adjusted) return by subtracting the inflation rate from your annualized ROI.