ROI CalculatorCalculators
Return on investment, with an annualized rate.
How to calculate ROI percentage and compare returns over different years
You put $10,000 into something and got $15,000 back. The return is 50%, but that number alone can't tell you whether it beat an option that returned 20% in one year.
Why a bare ROI figure can mislead
ROI is the gain divided by what you put in: (returned − invested) ÷ invested. $10,000 that comes back as $15,000 is a 50% ROI, a $5,000 gain. If you got back less than you put in, ROI is negative.
The formula ignores time. A 50% return sounds better than 20%, but not if the first took 5 years and the second took 1. It also ignores anything you leave out of the amounts, such as fees, taxes, and inflation. Compare two investments by the bare figure and you can easily pick the worse one.
Calculate the return, then put it on a yearly basis
Enter the amount invested and the amount returned in the ROI Calculator. It shows the ROI, the gain or loss, and the return multiple. Add the investment length in years and it also gives the annualized ROI, (1 + ROI)^(1 ÷ years) − 1. The 50% return above, earned over 3 years, is 14.47% a year. Cash added or taken out partway through isn't handled.
For a value that changed over several years, such as revenue or a portfolio, use the CAGR Calculator. CAGR is the steady yearly rate that takes the start value to the end value: $10,000 growing to $20,000 in 5 years is 14.87% a year. It is more honest than an average return. An investment that gains 50% one year and loses 50% the next has an average return of 0% but is down 25%, which CAGR reports as −13.4% a year. It also projects forward: $10,000 growing at 8% a year for 10 years reaches $21,589.25.
Calculate ROI as a percentage
- Subtract the amount invested from the amount returned. $15,000 − $10,000 = $5,000.
- Divide the gain by the amount invested: $5,000 ÷ $10,000 = 0.5.
- Multiply by 100 to get the percentage: 50%.
- Enter the same amounts and the number of years in the ROI Calculator to get the annualized ROI.
- Compare investments by their annualized figures.
What ROI and CAGR leave out
- Taxes, fees, and inflation aren't subtracted unless you include them in the amounts.
- Neither calculator handles deposits or withdrawals made along the way.
- CAGR hides volatility. Two investments with the same CAGR can take very different paths.
- The results are estimates for comparing options. They are not financial advice.
Frequently asked questions
How is ROI calculated as a percentage?
Subtract the cost from the return, divide by the cost, and multiply by 100. $10,000 returned as $15,000 is 50%.
What is annualized ROI?
The yearly rate that would produce the same total return. A 50% ROI over 3 years is 14.47% a year.
What is the difference between ROI and CAGR?
ROI is the total return on one amount. CAGR is the steady yearly growth rate between a start value and an end value over several years.
Can ROI be negative?
Yes. If you got back less than you put in, ROI is negative.
Related tools
Tools used in this guide
CAGR CalculatorCalculators
Compound annual growth rate between two values.
