ROI Calculator

About the ROI Calculator

Return on Investment (ROI) is the most widely used metric for evaluating the profitability of any investment, project, or business decision. Whether you're evaluating stocks, real estate, marketing spend, business equipment, or employee training programs, ROI reduces any investment to a single comparable percentage. Our ROI calculator handles both simple ROI and annualized ROI for investments held over multiple years.

How It Works

Simple ROI = (Net Profit ÷ Cost of Investment) × 100. If you invest $10,000 and receive $13,000 back, your ROI is (3,000 ÷ 10,000) × 100 = 30%. Annualized ROI accounts for time: Annualized ROI = [(1 + ROI)^(1/years) - 1] × 100. A 30% ROI over 3 years equals 9.14% annualized — very different from a 30% ROI achieved in one year. Always compare annualized ROI when investments span different time periods.

Tips & Best Practices

• ✓The S&P 500's average annualized ROI since 1926 is approximately 10% including dividends.
• ✓Always use annualized ROI when comparing investments with different time horizons.
• ✓ROI doesn't account for risk — a 15% ROI with high variance may be worse than 10% guaranteed.
• ✓Marketing ROI benchmark: $5 return for every $1 spent is considered good for most industries.
• ✓Real estate investors target 8–12% cash-on-cash ROI for rental properties.

Who Uses This Calculator

Business owners evaluating capital expenditures, investors comparing asset classes, and marketers measuring campaign effectiveness all use ROI daily. This calculator is particularly useful paired with our payback period calculator to understand both the return and the timeline of any investment.