ROI Calculator (Return on Investment)

This ROI calculator measures return on investment from what you put in and what you got back. Return on investment reduces any deal to one comparable percentage. Enter what you put in and what you got back and this calculator returns the net gain, the ROI and — if you add the holding period — the annualised return (CAGR).

The maths

ROI = ((returned − invested) ÷ invested) × 100
CAGR = ((returned ÷ invested)^(1/years) − 1) × 100

ROI ignores time; CAGR converts the result into a steady yearly growth rate.

Where to use it

It works for anything with a cost and an outcome: a stock position, a rental property, a marketing campaign or a business purchase. Comparing CAGR rather than raw ROI keeps things fair when the time periods differ.

Worked example

Invest 12,000 and sell four years later for 18,000:

net gain = 18,000 − 12,000 = 6,000
ROI      = (6,000 ÷ 12,000) × 100 = 50%
CAGR     = (18,000 ÷ 12,000)^(1/4) − 1 ≈ 10.67%

A 50% return reads as excellent in isolation. Annualised it is 10.67% a year — respectable, and comparable to the long-run average of a broad equity index rather than ahead of it. Hold the identical gain over ten years instead of four and the CAGR drops to 4.14%, a far less impressive result from the very same ROI figure. This is why the holding period is not an optional extra field.

Losses are not symmetric

A 50% loss needs a 100% gain to recover, and the formula shows why: from 10,000 down to 5,000, returning to 10,000 is (10,000 − 5,000) ÷ 5,000 = 100%. The deeper the hole the steeper the climb — a 75% loss requires a 300% gain.

That asymmetry is the arithmetic underneath position sizing and stop-losses. It also explains why a portfolio that rises 20% and then falls 20% is down rather than flat: 1.2 × 0.8 = 0.96, a 4% loss. Averaging percentages taken against different bases does not behave the way intuition suggests, and CAGR is the figure that corrects for it.

What to enter as the investment

The commonest error is entering the purchase price and forgetting everything else that went in. For a rental property that means the deposit plus stamp duty, legal fees, renovation and the interest paid before it let. For a marketing campaign it means the spend plus staff time and tooling. For a share position it means the purchase plus every commission and the tax owed on the way out.

ROI is only comparable between two options when both costs are counted the same way, so enter the total you actually parted with rather than the headline price. Use the annualised figure whenever the holding periods differ, otherwise a slow 40% always appears to beat a fast 25% — which is exactly backwards. Compound Interest Calculator is the better tool when the money stayed invested and kept growing rather than being sold once.

Private and precise

Every figure is worked out in your browser with standard financial formulas. Nothing you type is uploaded, stored or sent anywhere.