ROI Calculator - Return on Investment Calculator

Calculate your Return on Investment (ROI) with our free online calculator. Get instant results with detailed analysis, profit calculations, and annualized returns for smart investment decisions.

ROI Calculator

Enter the amount you initially invested
Enter the current or final value of your investment
Enter the duration in years (e.g., 1.5 for 18 months)
Enter any additional money added during the investment period

How to Use the ROI Calculator

  1. Initial Investment Amount: Enter the total amount you initially invested in dollars.
  2. Final Investment Value: Enter the current or final value of your investment.
  3. Investment Duration: Enter how long you held the investment in years (decimals allowed).
  4. Additional Contributions (Optional): If you added more money during the investment period, enter that amount.
  5. Calculate: Click the "Calculate ROI" button to get your results instantly.
  6. Review Results: Analyze your ROI percentage, profit/loss, and annualized returns.

ROI Formula and Calculation Steps

Basic ROI Formula:

ROI = ((Final Value - Initial Investment - Additional Contributions) / (Initial Investment + Additional Contributions)) × 100%

Calculation Steps:

  1. Calculate Total Investment = Initial Investment + Additional Contributions
  2. Calculate Net Profit = Final Value - Total Investment
  3. Calculate ROI Percentage = (Net Profit / Total Investment) × 100%
  4. Calculate Annualized ROI = ((Final Value / Total Investment)^(1/Years)) - 1) × 100%
  5. Calculate Investment Multiple = Final Value / Total Investment

About This ROI Calculator

Our Return on Investment (ROI) calculator is a comprehensive financial tool designed to help investors, business owners, and financial professionals evaluate the profitability of their investments. ROI is one of the most important metrics in finance, providing a clear picture of how well an investment has performed relative to its cost.

This calculator goes beyond basic ROI calculation by providing additional insights such as annualized returns, investment multiples, and the ability to account for additional contributions made during the investment period. This makes it particularly useful for evaluating long-term investments, business ventures, and portfolio performance.

Whether you're evaluating stock investments, real estate purchases, business acquisitions, or any other investment opportunity, this tool provides the essential metrics you need to make informed financial decisions.

Use Cases and Applications

Investment Analysis

  • Stock market investments
  • Mutual funds and ETFs
  • Cryptocurrency investments
  • Bond investments

Business Evaluation

  • Marketing campaign effectiveness
  • Equipment and machinery purchases
  • Business expansion projects
  • Training and development programs

Real Estate

  • Rental property investments
  • Fix and flip projects
  • Commercial real estate
  • REITs performance

Personal Finance

  • Education investment returns
  • Home improvement projects
  • Retirement planning
  • Insurance policies

ROI Calculation Examples

Example 1: Stock Investment

Scenario: You invested $5,000 in stocks, and after 2 years, your portfolio is worth $6,500.

  • Initial Investment: $5,000
  • Final Value: $6,500
  • Duration: 2 years
  • ROI: 30%
  • Annualized ROI: 14.02%

Example 2: Real Estate Investment

Scenario: You bought a rental property for $200,000, spent $20,000 on improvements, and sold it for $280,000 after 3 years.

  • Initial Investment: $200,000
  • Additional Contributions: $20,000
  • Final Value: $280,000
  • Duration: 3 years
  • ROI: 27.27%
  • Annualized ROI: 8.39%

Example 3: Business Investment

Scenario: A company invested $50,000 in new equipment, which generated $75,000 in additional revenue over 18 months.

  • Initial Investment: $50,000
  • Final Value: $75,000
  • Duration: 1.5 years
  • ROI: 50%
  • Annualized ROI: 31.61%

Frequently Asked Questions (FAQ)

What is a good ROI percentage?

A good ROI varies by industry and investment type. Generally, 10-12% annually is considered good for stock market investments, while 15-20% is excellent. Real estate typically sees 8-12% ROI, and business investments may target 15-25% or higher.

What's the difference between ROI and annualized ROI?

ROI shows the total return over the entire investment period, while annualized ROI shows the equivalent yearly return rate. Annualized ROI is better for comparing investments with different time periods.

Should I include dividends or rental income in the final value?

Yes, include all income generated by the investment (dividends, interest, rental income, etc.) in the final value to get an accurate ROI calculation.

Can ROI be negative?

Yes, ROI can be negative if your investment loses value. A negative ROI indicates a loss on your investment.

How do I account for inflation in ROI calculations?

This calculator shows nominal ROI. To get real ROI (adjusted for inflation), subtract the inflation rate from your calculated ROI. For example, if your ROI is 8% and inflation is 3%, your real ROI is approximately 5%.

What are the limitations of ROI calculations?

ROI doesn't account for the time value of money, risk factors, or opportunity costs. It's best used alongside other financial metrics like NPV, IRR, and risk-adjusted returns for comprehensive investment analysis.