ROI Calculator
Find the return on any investment, both total and annualized.
Your Details
Breakdown
Visual split of the key components
- Initial Investment5000
- Profit2200
Sensitivity
How the result changes across a range
How It Works
- Enter the values on the left.
- Press Calculate to see your results and charts.
- Use Reset to start over from the defaults.
Formula Used
Annualized ROI = ((Final Value ÷ Cost)^(1/years) − 1) × 100.
Good to Know
- • Annualized ROI lets you compare investments held for different lengths of time.
- • A high total ROI over many years can be a mediocre annualized return.
Important Notes
- • Doesn't account for taxes on the gain.
- • Doesn't account for cash flows added or withdrawn along the way.
Total ROI Alone Can Be Misleading
A 44% total return sounds identical whether it took 2 years or 20 — but the underlying performance is completely different. Annualizing the return spreads it evenly across the holding period, which is what makes it possible to fairly compare this investment against others held for a different length of time.
What This Simple ROI Model Doesn't Capture
This calculator treats the investment as a single amount in and a single amount out. Real investments often involve cash added or withdrawn partway through — additional contributions, partial sales, dividends reinvested — which a more detailed cash-flow analysis (like an internal rate of return calculation) would capture more precisely than this simplified version.
A Closer Look at the Terms
- Total ROI — net gain divided by cost, expressed as a percentage.
- Annualized ROI — total ROI spread evenly across the holding period, for fair comparison across different time horizons.
From Theory to Numbers: A 4-Year Investment
$5,000 invested, grown to $7,200 after 4 years:
Annualized ROI = ((7,200÷5,000)^(1/4) − 1) × 100 ≈ 9.6%
The 44% total return sounds large, but annualized it's roughly 9.6% per year — a useful and more comparable figure against, say, a savings account's stated annual rate or another investment's annualized performance.
Holding Period Comparison Table
Same 44% total ROI, different holding periods:
| Years Held | Annualized ROI |
|---|---|
| 1 | 44% |
| 4 | 9.6% |
| 10 | 3.7% |
What People Get Wrong Calculating ROI
- Comparing total ROI across different time horizons — always annualize for a fair comparison.
- Ignoring taxes on the gain — net ROI after tax is lower than the gross figure shown.