ROI Calculator
Return on Investment (ROI)
Net Profit / Loss
Market Comparisons
How does your investment stack up?
- Savings Account (3.5%) -
- Fixed Deposit (6.0%) -
- Stock Market (12.0%) -
Formula Explanation
Return on Investment (ROI) is a simple ratio that divides the net profit (or loss) from an investment by its cost.
If you hold an investment for multiple years, the Annualized ROI provides a more accurate picture of your yearly growth rate, taking compounding into account.
Worked Examples
You buy stocks for $5,000 and sell them for $6,500.
ROI = [($6,500 - $5,000) / $5,000] × 100 = 30%
You invest $20,000 in a venture, but it's now worth $15,000.
ROI = [($15,000 - $20,000) / $20,000] × 100 = -25%
You buy a house for $200,000 and sell it 5 years later for $280,000.
ROI = [($280,000 - $200,000) / $200,000] × 100 = 40%
Annualized ROI = [ ($280,000 / $200,000) ^ (1 / 5) - 1 ] × 100 = 6.96%
Frequently Asked Questions
What is a good ROI?
A "good" ROI depends on your risk tolerance and the time it takes to generate the return. Generally, an annualized ROI of 7% to 10% is considered strong for stock market investments, adjusting for inflation.
Why use Annualized ROI?
Standard ROI doesn't account for time. A 50% ROI over 1 year is fantastic, but a 50% ROI over 20 years is very poor. Annualized ROI standardizes the return to a yearly rate, allowing you to compare investments held for different durations.
Does ROI include dividends or interest?
Yes, for an accurate ROI calculation, your "Final Value" should include any dividends, interest payments, or other cash flow generated by the investment during the holding period.
Can ROI be negative?
Absolutely. If your final value is less than your initial investment, your net profit is negative, resulting in a negative ROI, which represents a loss.