ROI Calculator
Calculate total Return on Investment, net gain/loss, and profitability
📊 What is ROI (Return on Investment)?
ROI (Return on Investment) measures the total profit or loss of an investment relative to its total cost. It's expressed as a percentage and answers the question:"For every dollar I invested, how much did I gain or lose?"
💡 Pro Tip: ROI is a simple, powerful metric for comparing investments. However, it doesn't account for time—a 50% ROI over 1 year is very different from 50% over 10 years!
ROI is widely used in investing, business, marketing (ROMI), and real estate because it provides a simple way to measure profitability.
📐 ROI Formula
ROI is calculated using this formula:
ROI = (Final Value − Total Cost) ÷ Total Cost × 100Example Calculation
Bought stock for $10,000, sold for $15,000, paid $200 in fees:
ROI = ($15,000 − $10,200) ÷ $10,200 × 100 = 47.06%
⚖️ ROI vs CAGR: What's the Difference?
| Aspect | ROI | CAGR |
|---|---|---|
| What it measures | Total profitability (%) | Annualized growth rate (%) |
| Time consideration | Ignores time | Accounts for time |
| Best for comparing | Same-duration investments | Different-duration investments |
| Simplicity | Very simple | Slightly more complex |
⚠️ Example: Investment A: 100% ROI in 10 years (CAGR = 7.18%). Investment B: 50% ROI in 2 years (CAGR = 22.5%). ROI makes A look better, but B grew much faster!
📈 ROI Examples by Investment Type
| Investment | Initial | Final | ROI |
|---|---|---|---|
| Stock purchase | $5,000 | $8,000 | +60% |
| Real estate | $200,000 | $280,000 | +40% |
| Failed startup | $50,000 | $15,000 | -70% |
| Marketing campaign | $10,000 | $35,000 | +250% |
*These are simplified examples. Real ROI calculations should include all costs (fees, taxes, maintenance).
✅ When to Use ROI (and When Not To)
✅ Use ROI For
- ✓ Comparing investments with same holding period
- ✓ Quick profitability assessment
- ✓ Marketing campaign effectiveness
- ✓ Business project evaluation
- ✓ Real estate transactions
❌ Do Not Use ROI For
- ✗ Comparing investments with different durations
- ✗ Ongoing investments with multiple cash flows
- ✗ When time-adjusted returns matter
- ✗ Portfolio performance over time (use CAGR)
❓ Frequently Asked Questions
What is ROI?
ROI stands for Return on Investment. It measures the total profit or loss of an investment relative to its total cost and is expressed as a percentage.
Is ROI annualized?
No. ROI measures total profitability and does not account for how long the investment was held. It is not an annualized return. For annualized returns, use CAGR.
Can ROI be negative?
Yes. If the final value of an investment is lower than its total cost, the ROI will be negative, indicating a loss. A -50% ROI means you lost half your investment.
What is a good ROI?
A "good" ROI depends on the investment type, risk level, and time period. For stocks, 7-10% annually is often considered good. For real estate, 8-12% including appreciation. For business projects, 15-25%+ is typically expected.