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Measuring return on investment takes three numbers and about twenty seconds with the calculator above. Enter the amount invested — the total cash you put in, including the purchase price plus any fees, commissions, or improvement costs paid at the start. Then enter the amount returned — the total cash you got back, including sale proceeds, dividends, interest, or rental income received. If the investment is still open, use its current market value as the amount returned to estimate your unrealized ROI.
Optionally, enter the years held. This unlocks the annualized return, which converts your total gain into an equivalent yearly growth rate so you can fairly compare a 6-month trade with a 10-year property holding. Use fractional years for partial periods — 0.5 for six months, 1.25 for fifteen months.
Press “Calculate ROI” to see three results: ROI as a percentage (total gain relative to cost), net profit in dollars (returned minus invested), and the annualized return (the constant yearly rate that would grow the invested amount into the returned amount). A positive ROI means you made money; a negative ROI means you lost money. A 0% ROI means you broke even — you got back exactly what you put in, which after inflation is actually a small loss in purchasing power.
Use ROI to compare opportunities of similar risk and duration. A useful rule of thumb: first check whether the annualized ROI beats the risk-free rate (recently around 4–5% for US Treasuries). If it does not, you took risk for nothing. Next, compare against a relevant benchmark — the S&P 500’s long-run ~10% annualized return for stocks, or local cap rates for rental property. Remember that past returns never guarantee future results, and no calculator can predict markets.
Return on investment (ROI) is the most widely used profitability ratio in finance: net gain divided by cost, expressed as a percentage. If you invest $10,000 and receive $12,500, your net profit is $2,500 and your ROI is 25%. The metric’s power is its simplicity — it reduces any investment, from stocks to real estate to a marketing campaign, to a single comparable number.
Several related concepts sharpen ROI’s meaning. Net profit is the absolute dollar gain (returned minus invested); a 50% ROI on $1,000 ($500 profit) and a 10% ROI on $100,000 ($10,000 profit) tell very different stories about wealth created. Annualized return — equivalent to the compound annual growth rate (CAGR) — spreads the gain evenly across each year held, so a 50% total return over 5 years becomes roughly 8.45% per year, far more informative than the raw 50%. Opportunity cost is what you gave up by choosing this investment over the next-best alternative; a 6% ROI looks poor if a risk-free Treasury paid 5% with zero risk. Risk-adjusted return asks how much return you earned per unit of risk taken — a volatile 20% ROI may be inferior to a steady 12% once risk is weighed.
ROI is beloved because it is universal and intuitive: executives, landlords, and retail investors all speak it. It works for any asset class and any currency, requires no finance degree, and makes go/no-go decisions fast. Businesses use ROI to rank capital projects, marketers to justify ad spend (a $5,000 campaign generating $20,000 in gross profit is a 300% ROI), and individuals to compare a brokerage account against paying down a mortgage.
Typical ROI benchmarks give context. US stocks have delivered about 10% annualized before inflation (7% real) over the long run; bonds about 5–6% nominal. Rental real estate often targets 8–12% annualized cash-on-cash returns. Small businesses commonly aim for 15%+ to compensate for illiquidity and effort. Marketing campaigns are often judged against 200–500% ROI targets. If your computed ROI sits far above these norms, double-check your inputs — especially omitted costs — before celebrating.
But ROI has well-known blind spots. It ignores time unless annualized — a 30% ROI over ten years is mediocre, over ten months is excellent. It ignores risk — two investments with 15% ROI are not equal if one could plausibly go to zero. It ignores cash-flow timing within the period and the time value of money (a dollar today beats a dollar in five years). It can also be gamed: excluding inconvenient costs inflates ROI, and leverage magnifies it — a property gaining 20% on a purchase made with 20% down shows a 100% ROI on cash invested, before mortgage interest. Sophisticated investors therefore pair ROI with IRR, net present value, and payback period — which is exactly why this site offers those calculators too.
The basic ROI formula is:
ROI = ((Amount Returned − Amount Invested) ÷ Amount Invested) × 100
The annualized ROI (compound annual growth rate) accounts for time:
Annualized ROI = ((Amount Returned ÷ Amount Invested)^(1 ÷ Years) − 1) × 100
Net profit is simply Amount Returned − Amount Invested. The annualized formula assumes gains compound smoothly at a constant rate; for investments with irregular interim cash flows, the internal rate of return (IRR) is the more precise measure. When years held equals exactly 1, annualized ROI and simple ROI are identical.
Worked example 1. You invest $10,000 in an index fund and sell one year later for $15,000. Net profit = $15,000 − $10,000 = $5,000. ROI = ($5,000 ÷ $10,000) × 100 = 50%. Annualized: ($15,000 ÷ $10,000)^(1÷1) − 1 = 1.5 − 1 = 50.00% per year.
Worked example 2. You buy a rental condo for $200,000, collect $36,000 in net rental income over 3 years, then sell for $215,000. Total returned = $215,000 + $36,000 = $251,000. Net profit = $251,000 − $200,000 = $51,000. Simple ROI = ($51,000 ÷ $200,000) × 100 = 25.5%. Annualized: ($251,000 ÷ $200,000)^(1÷3) − 1 = (1.255)^(0.3333) − 1 ≈ 1.0786 − 1 = 7.86% per year. The 25.5% headline sounds exciting; the 7.86% annualized figure is the honest number for comparing against a 5% Treasury or a 10% stock benchmark.
Leverage shows the formula’s sensitivity to what counts as “invested.” If that $200,000 condo was bought with $40,000 down and a $160,000 mortgage (ignoring interest for simplicity), the cash ROI becomes $51,000 ÷ $40,000 = 127.5% — the same property, wildly different ROI. Always clarify whether your ROI is on total price or cash invested, because the two answer different questions.
Maya invests $8,000 in a technology ETF in January 2023. Over 18 months she receives $240 in dividends, then sells for $11,200 in July 2024. Total returned = $11,200 + $240 = $11,440. Net profit = $11,440 − $8,000 = $3,440. Simple ROI = ($3,440 ÷ $8,000) × 100 = 43%. Annualized over 1.5 years: ($11,440 ÷ $8,000)^(1÷1.5) − 1 = (1.43)^(0.6667) − 1 ≈ 1.269 − 1 = 26.9% per year. The dividends added about 3 percentage points to the simple ROI — a reminder to include every cash flow, not just the sale price. After a 15% capital-gains tax on the $3,200 price gain ($480), her after-tax returned amount is $10,960 and her after-tax ROI is 37% — still excellent, but a full 6 points lower. Maya compares the 26.9% annualized return against her 6.5% mortgage rate: the investment clearly won, though she notes the volatility she endured to earn it.
Carlos invests $50,000 for a 20% stake in a friend’s coffee shop. Over 4 years he receives $28,000 in profit distributions, then sells his stake back for $45,000. Total returned = $45,000 + $28,000 = $73,000. Net profit = $73,000 − $50,000 = $23,000. Simple ROI = ($23,000 ÷ $50,000) × 100 = 46%. Annualized: ($73,000 ÷ $50,000)^(1÷4) − 1 = (1.46)^(0.25) − 1 ≈ 1.0992 − 1 = 9.92% per year. Respectable — but Carlos notes the distributions arrived unevenly (nothing in year one), his money was illiquid for four years, and a stock index returned about 10% annually over the same stretch with daily liquidity and no operational headaches. Simple ROI said “46% — great!”; the fuller picture says “fair compensation for the risk, illiquidity, and hassle.” He also realizes that had he computed ROI after year two (distributions of only $4,000 and a stake worth maybe $40,000), the interim ROI would have been negative — a useful reminder that ROI is highly sensitive to the measurement endpoint.
1. Comparing ROIs over different time periods. A 40% ROI in 6 months (roughly 96% annualized) crushes a 60% ROI over 5 years (about 9.9% annualized). Always annualize before comparing — the calculator does this automatically when you enter years held.
2. Forgetting all-in costs. Commissions, closing costs, repairs, management fees, and taxes all reduce the amount returned or inflate the amount invested. A house that “returned 30%” may be 12% after a 6% agent commission, transfer taxes, and a new roof. List every dollar in and out before trusting the percentage.
3. Ignoring interim cash flows. Dividends, interest, coupon payments, and rental income are part of the return. Investors who count only the sale price systematically understate ROI — sometimes by a third or more for income-oriented assets like dividend stocks or rentals.
4. Confusing total ROI with annualized return. Quoting the simple total (“I made 80%!”) without the time frame misleads — 80% over 8 years is just 7.6% per year. State both figures, and lead with the annualized number whenever you compare investments.
5. Ignoring risk and opportunity cost. A 15% ROI from a speculative token is not “better” than 9% from Treasury bonds — the risk profiles differ completely. And money always has alternatives: beating a 5% risk-free rate by one point while taking equity-level risk is a poor trade, not a victory. Judge returns against the risk taken and the simplest alternative you passed up.
ROI is the starting point, not the whole analysis. Our IRR Calculator handles investments with irregular cash flows — the precise tool when money moves in and out over time. Our Investment Calculator projects how regular contributions compound into future wealth. Browse the full Financial Calculators collection for 80+ free tools covering loans, retirement, taxes, and business finance.
This page provides an ROI (return on investment) calculator computing: ROI% = ((amount_returned − amount_invested) ÷ amount_invested) × 100; net_profit = amount_returned − amount_invested; annualized_ROI% = ((amount_returned ÷ amount_invested)^(1 ÷ years_held) − 1) × 100. Canonical facts: ROI expresses total gain relative to cost as a percentage; positive ROI indicates profit and negative ROI indicates loss; annualized ROI (CAGR) enables comparison across different holding periods; ROI ignores risk, the timing of interim cash flows, and the time value of money; IRR and NPV complement ROI for irregular cash flows and precise valuation. Educational estimates only — not financial advice. Past performance does not guarantee future results.
Cite this page: Sigma Calculator. “ROI Calculator — Return on Investment.” https://sigmacalculator.net/financial-calculators/roi-calculator/. Accessed October 7, 2026.
Formula: ROI = (returned − invested) ÷ invested × 100. Annualized = (returned ÷ invested)^(1/years) − 1. Example: $10,000 → $15,000 = +50.00% ROI, $5,000 profit.
Subtract the investment from the return, divide by the investment and multiply by 100. $15,000 back on $10,000 invested = 50% ROI.
It depends on risk and time — the stock market averages roughly 7–10% per year long term. Compare any ROI against that benchmark and the years held.
Profit is dollars earned ($5,000); ROI is profit relative to what you put in (50%). ROI lets you compare investments of different sizes.
The single yearly rate that gets you from invested to returned over the holding period — essential for comparing a 1-year 50% gain against a 5-year 80% gain.
Yes — if you get back less than you invested, ROI goes below zero. A −20% ROI means you lost a fifth of the investment.