Return on Investment Calculator

Return on investment (ROI) is the gain on an investment as a percentage of what was put in:

ROI = (Final value - Initial amount) / Initial amount * 100

Enter the amount invested, what it is worth now and the number of years, and the calculator shows the gain, the total ROI and two yearly figures:

• Simple ROI per year: the total ROI divided by the years, Total ROI / Years.

• Compound ROI per year: the steady yearly rate that turns the initial amount into the final value, with each year's gain reinvested. It is also called the compound annual growth rate (CAGR):

  CAGR = ((Final / Initial)^(1 / Years) - 1) * 100

Example

$1,000 invested, worth $1,500 after 5 years:

1. Gain:

   1,500 - 1,000 = 500

2. Total ROI:

   500 / 1,000 * 100 = 50%

3. Simple ROI per year:

   50 / 5 = 10%

4. Compound ROI per year:

   (1.5^(1/5) - 1) * 100 = 8.45%

The compound figure is lower, because each year's gain builds on the gains before it. It is the one to compare with an interest rate or another investment.

Frequently asked questions

What is a good ROI?

It depends on the risk and the time. As a reference, broad stock markets have returned roughly 7–10% a year over long periods, before inflation, with large swings from year to year. A yearly figure is only comparable to another yearly figure, so compare the compound ROI.

Can ROI be negative?

Yes. A final value below the initial amount gives a negative gain and a negative ROI: $1,000 falling to $800 is −20%.

Does ROI include costs and dividends?

Only what you put into the two amounts. For a true figure, count fees and taxes in the initial amount, and any dividends or interest received in the final value.