ROI Calculator
Calculate the return on investment and annualized ROI for any investment.
Inputs
Leave at 0 for total ROI only
Results
Formula
Net Profit = Final Value - Initial Investment. Annualized ROI = ((Final Value / Initial Investment)^(1/years) - 1) × 100, which normalizes returns over time.
Worked Example
When to Use This Calculator
Use this calculator to evaluate the return on any investment, project, or business decision. Annualized ROI is especially useful when comparing investments held for different time periods.
Important Assumptions
- Returns are realized (not unrealized gains).
- No additional costs or fees beyond the initial investment.
- Time period is measured in years for annualization.
Common Mistakes to Avoid
- Comparing ROI of investments with different time horizons without annualizing.
- Ignoring fees, taxes, or opportunity costs.
- Using ROI for investments with irregular cash flows (use IRR instead).
Frequently Asked Questions
What is a good ROI?
There is no universal answer. It depends on the risk, time period, and alternatives available. Compare ROI against relevant benchmarks for your specific context.
What is annualized ROI?
Annualized ROI normalizes the return to a per-year basis, making it possible to compare investments held for different time periods.
Is ROI the same as CAGR?
Annualized ROI and CAGR use the same formula. ROI can also be expressed as a total (non-annualized) percentage.