How do you calculate ROI?

ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number (the net return) by the cost of the investment, and finally, multiplying it by 100.

A 'good' ROI depends on the asset class and risk tolerance. For the stock market, a 7-10% annual ROI is often considered good. For real estate or business ventures, expectations might be higher (15%+).

ROI Calculator

Measure the efficiency and profitability of your investments.

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Amount Invested

Amount Returned

Investment Duration Enter time in years (e.g., 2.5)

Return on Investment

Profitable Investment

Initial Investment

$10,000

Total Gain

+$5,000

Final Value

$15,000

Annualized ROI

14.47%

Understanding Return on Investment (ROI)

What is the ROI formula?

The basic formula is: (Final Value - Initial Cost) / Initial Cost. The result is multiplied by 100 to get a percentage. It is the standard metric for evaluating the efficiency of an investment.

What is Annualized ROI?

Annualized ROI adjusts the return for a standard one-year period. This allows you to compare the performance of investments with different time durations (e.g., comparing a 6-month stock trade to a 3-year real estate investment).

What is a good ROI percentage?

A "good" ROI varies by industry. For the stock market, a 7-10% annual return is standard. For riskier investments like crypto or startups, investors might seek 20% or higher to justify the risk.

ROI vs. Profit: What's the difference?

Profit is an absolute number (e.g., $500). ROI is a relative percentage. ROI is often more useful because it tells you how efficient the investment was relative to the cost.