Return on investment (ROI) measures the profit of an investment as a percentage of its cost: ROI = (Final Value - Cost) / Cost x 100. It is simple but ignores the time the money was invested.

What is annualized ROI?

Annualized ROI converts the total return into an average per year, accounting for compounding. It lets you compare investments held for different lengths of time.

Return on Investment Calculator

See your total return and its annualized rate.

Investment Details

Cost of Investment ($)

Final Value ($)

Holding Period (years)

yrs

Return on Investment (ROI)

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Annualized ROI

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Total Profit

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ROI vs annualized ROI

$5,00,000 growing to $8,00,000 in 3 years is a 60% total ROI, but an annualized ROI of about 17%. Always compare annualized returns when investments have different holding periods.

ROI FAQ

Should ROI include taxes and fees?▶

For an honest number, yes. Subtract transaction costs, taxes and any additional expenses from the final value before calculating ROI.

Is higher ROI always better?▶

Not necessarily — higher returns usually mean higher risk. Consider both ROI and risk, and compare with the return of safer alternatives.

ROI: Return on Investment

Formula: Profit ÷ Cost × 100

Annualized: CAGR of the return

Uses: Compare any investment

ROI Calculator — measure your return on any investment

Return on Investment (ROI) is the most universal performance measure: profit divided by cost. This calculator also annualizes the return (CAGR) so you can compare investments held for different periods on an equal footing.

ROI vs annualized return

ROI = (Final value − Cost) ÷ Cost × 100. A $50,000 gain on $2,00,000 cost is 25% ROI.

But 25% over 5 years (5% p.a.) is very different from 25% in 1 year. CAGR fixes this: CAGR = (Final ÷ Cost)^(1/years) − 1.

Always compare annualized returns across different time horizons — a financial planner never compares raw ROI across periods.

Beyond ROI: risk-adjusted returns

ROI ignores risk. A 15% ROI from FD is risk-free; the same from a startup is a gamble.

Use Sharpе-ratio thinking: higher return per unit of volatility is 'better' ROI.

Real ROI subtracts inflation — 12% nominal with 6% inflation is only ~5.7% real.

How to use this calculator

Enter the total cost / invested amount.
Enter the current or final value.
Optionally enter the number of years held.
Read ROI percentage and annualized (CAGR) return.

Pro tips

Include all costs (fees, brokerage, taxes) in 'cost' for an honest ROI.
For property, add renovation and maintenance costs to the cost side.
Annualize to compare a 1-year stock trade with a 10-year FD.

Frequently asked questions

What is a good ROI?▶

It depends on risk. Risk-free FDs give 5–8%. A good equity or business ROI is 12–15% annualized over the long term. Compare against your cost of capital.

How is annualized ROI calculated?▶

CAGR = (Final ÷ Cost)^(1/years) − 1, expressed as a percentage. It smooths the multi-year return into an equivalent yearly rate.

ROI Calculator