Return on investment, or ROI, is a simple way to see how much money you made or lost on an investment compared with what you put in. It compares your gain or loss to your cost and expresses the result as a percentage, which makes it easy to compare different investments side by side.
Return on Investment (ROI) Calculator
How to use this return on investment (ROI) calculator
This ROI calculator is designed to be fast and readable for everyday questions like “Did this investment actually pay off?” or “How does this compare with another option?” It focuses on a single investment and uses a simple ROI formula, with an optional annualized return if you enter how many years you held the investment.
Here is how each input works:
- Initial investment ($): The amount you paid at the start. For a stock, this might be your purchase price times the number of shares. For a property, it could be your down payment plus any cash you used for the purchase.
- Additional costs and fees ($): One-time costs that should be counted as part of your total investment, such as brokerage commissions, closing costs, or transaction fees. These amounts are added to your initial investment to form your cost basis.
- Final or current value ($): What the investment is worth now. If you sold it, enter the sale proceeds. If you still hold it, use the current market value and include any cash you already received, such as dividends you took out of the account.
- Years invested (optional): How long you held the investment from start to finish. If you enter a number of years, the calculator will estimate an annualized return, sometimes called an average yearly return, in addition to the total ROI.
As you change the numbers, the results update automatically. If something is not realistic, such as a negative value or a total amount invested of zero, the calculator shows an error message instead of forcing a misleading percentage.
Suppose you bought shares of a stock for a total of $10,000. A few years later, you sell the position for $12,500. You did not pay any extra fees and you held the investment for 3 years.
- Initial investment: $10,000
- Additional costs and fees: $0
- Final or current value: $12,500
- Years invested: 3
Your gain is $2,500 and your total ROI is 25 percent. The annualized return is a little under 8 percent per year on average, because your money grew over several years, not all at once.
Tip: Try entering the same final value but different holding periods. A 25 percent gain over 1 year is much stronger than the same 25 percent gain spread over 5 or 10 years. Annualized return helps you see that difference quickly.
Understanding your ROI results and the breakdown
The results panel is built to answer three questions clearly: “How much did I make or lose?”, “What is my ROI percentage?”, and “How does that compare with what I invested?” To keep things simple, the calculator treats your total amount invested as your cost basis and compares it directly with your ending value.
You will see three main outputs:
- Total return (ROI): Your gain or loss divided by your total amount invested, expressed as a percentage. A positive ROI means you ended up with more than you invested. A negative ROI means you lost money. For example, if you invest $10,000 and end up with $12,500, your ROI is 25 percent.
- Gain or loss: The dollar difference between your ending value and your cost basis. This number makes the percentage feel more concrete because it tells you how many dollars you made or lost in total.
- Annualized return (per year): If you enter years invested, the calculator estimates an average yearly return that would turn your invested amount into your ending amount over that time. This uses a compound growth formula, similar to what many investment return calculators and CAGR tools use.
Below the headline numbers, the breakdown card shows three pieces of your investment:
- Amount invested (cost basis): Your total out-of-pocket cost, including your initial investment plus any additional costs and fees.
- Value today: What the investment is worth now or what you received when you sold it.
- Total gain or loss: The difference between those two amounts, shown in both dollars and as a bar so you can see it relative to your cost and final value.
When your ROI is positive, the gain bar and gain figure show how much “extra” you earned on top of your original investment. When your ROI is negative, the gain section turns into a loss, and the breakdown helps you see how much of your original capital you recovered versus how much was lost.
| Scenario | Amount invested | Value today | Total ROI | High level takeaway |
|---|---|---|---|---|
| Small gain | $5,000 | $5,400 | About 8% | Modest profit, can be reasonable for short holding periods or low risk investments. |
| Flat investment | $10,000 | $10,050 | Near 0% | Account is roughly break even before considering inflation, taxes, and fees. |
| Large loss | $8,000 | $4,000 | About -50% | You recovered only half of what you invested, which may call for a review of your risk level and diversification. |
Note: A “good” ROI depends on your goals, time horizon, and risk level. In general, an investment should at least beat inflation and compensate you for the risk you are taking, and many investors compare their ROI with broad market benchmarks when they evaluate performance.
ROI versus annualized return and other metrics
ROI is popular because it is easy to calculate and easy to understand. You subtract your cost from your ending value, divide that by your cost, and convert the result to a percentage. That said, it has important limitations, especially when you compare investments that were held for different lengths of time.
Two key points to keep in mind:
- ROI does not include time by itself. A 25 percent gain over 1 year is very different from a 25 percent gain over 10 years, even though the ROI is the same. That is why this calculator offers an annualized return when you enter years invested, similar to how many investment return and CAGR calculators work.
- Real world performance includes cash flows, taxes, and fees. In practice you might add money over time, receive dividends, sell part of an investment, or pay ongoing fund expenses. A simple ROI calculation cannot capture these details by itself, so many investors also look at internal rate of return (IRR), time-weighted returns, and after tax results when they evaluate a strategy.
For quick checks, ROI can still be very useful. It can help you:
- See whether a particular trade or project has been profitable overall.
- Compare two simple investments with similar time horizons.
- Set a minimum threshold for opportunities, such as “I want at least a 10 percent ROI before I consider this project.”
For long term planning, especially for retirement or college savings, you will usually want to pair ROI style thinking with tools that model compound growth, volatility, contributions over time, and the impact of inflation. That is where compound interest calculators and full investment growth calculators become helpful as a complement to this ROI tool.
Frequently Asked Questions (FAQs)
What is the formula for return on investment (ROI)?
The basic ROI formula is your gain or loss divided by your cost. You subtract your total amount invested from your final or current value, then divide that result by your total amount invested. The calculator follows this structure by combining your initial investment and additional costs into a single cost basis and comparing it with your ending value.
What is a good ROI?
There is no single percentage that counts as a good ROI in every situation. A reasonable ROI depends on the type of investment, how long you held it, the amount of risk involved, and what you could have earned in a diversified market portfolio. Many investors aim to beat inflation and earn at least as much as a relevant benchmark index for the risk they are taking.
Does this calculator include dividends, interest, or rental income?
Indirectly, yes. If you received cash payments like dividends, interest, or rent, you can treat those amounts as part of your final or current value when you enter numbers. For example, if you sold stock for $12,000 and collected $500 in dividends that you did not reinvest, you could enter $12,500 as the final value to capture those payments in your ROI.
What is the difference between ROI and annualized return?
ROI looks only at the total gain or loss compared with your cost and does not include how long the investment took. Annualized return, sometimes called a compound annual growth rate, spreads your total growth over the number of years to show an average yearly percentage. Two investments with the same ROI can have very different annualized returns if one was held much longer than the other.
Can ROI be negative?
Yes. If your ending value is lower than your total amount invested, your gain is negative and your ROI will be a negative percentage. The calculator highlights this with red styling and shows how much of your original investment you recovered versus how much you lost.