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ROI Calculator

Calculate return on investment

$
$
$
Show After-Tax Returns

Return on Investment

50.0%

Profit

Total Profit/Loss

$5,000

Total Return

$15,000

Annualized ROI

8.4%

With Contributions

$29,868

Investment Breakdown

Growth Over Time

S&P 500 line assumes historical average annual return of 10.5%

S&P 500 Benchmark

Your Investment

8.4%

annualized

Final value$29,868
Total profit$7,868

S&P 500 Index

10.5%

avg annual

Final value$32,168
Total profit$10,168
The S&P 500 would have outperformed by 2.1 percentage points annually

Contribution Summary

Monthly Contribution$200
Total Contributed$12,000
Contribution Growth$14,868
Total Portfolio Value$29,868

Frequently Asked Questions

Q

How do you calculate ROI (Return on Investment)?

ROI = [(Final Value - Initial Investment) ÷ Initial Investment] × 100. Example: Invest $10,000, sell for $15,000. ROI = ($15,000 - $10,000) ÷ $10,000 × 100 = 50% return. Include all costs (fees, taxes) and all gains (dividends, interest) for accurate ROI.

  • Formula: (Gain ÷ Cost) × 100 = ROI %
  • Include ALL costs: purchase price, fees, commissions
  • Include ALL returns: sale price, dividends, interest
  • Positive ROI = profit, Negative ROI = loss
  • Example: Buy stock at $1,000, sell at $1,200 = 20% ROI

ROI is the most basic investment performance metric. It tells you how much you made (or lost) relative to what you invested. However, it doesn't account for time - a 50% ROI over 10 years is very different from 50% in 1 year. For time comparison, use annualized ROI.

Q

What is a good ROI percentage?

Good ROI depends on investment type and risk. Stock market: 7-10% annually (historical average). Real estate: 8-12%. Bonds: 3-5%. High-yield savings: 4-5%. Any ROI beating inflation (3%) preserves purchasing power. Higher returns = higher risk.

  • Beat inflation (3%): Minimum goal to preserve purchasing power
  • S&P 500 long-term: ~10% nominal, ~7% after inflation
  • Risk-free rate (Treasury): ~4-5% in 2026
  • If promised 15%+ "guaranteed" - likely a scam
  • Higher returns always mean higher risk
Investment TypeTypical Annual ROIRisk LevelLiquidity
S&P 500 Index7-10%MediumHigh
Real Estate8-12%Medium-HighLow
Corporate Bonds4-6%Low-MediumMedium
High-Yield Savings4-5%Very LowHigh
CryptoHighly variableVery HighHigh
Q

What is annualized ROI and how do I calculate it?

Annualized ROI = average yearly return, accounting for compounding. Formula: [(Final Value ÷ Initial Value)^(1/Years) - 1] × 100. Example: $10,000 grows to $15,000 in 5 years. Annualized = (1.5^0.2 - 1) × 100 = 8.4% per year.

  • Annualized ROI enables apples-to-apples comparison
  • A 50% total ROI over 5 years = 8.4% annualized
  • A 50% total ROI over 10 years = 4.1% annualized
  • Use annualized ROI to compare investments of different durations
  • Formula: (Final/Initial)^(1/years) - 1
Total ROITime PeriodAnnualized ROI
50%1 year50.0%
50%3 years14.5%
50%5 years8.4%
100%5 years14.9%
100%10 years7.2%
Q

What is the difference between ROI and IRR?

ROI measures simple total return. IRR (Internal Rate of Return) accounts for timing of cash flows and compounding. Use ROI for simple comparisons. Use IRR when there are multiple cash flows at different times (like real estate with monthly rent).

  • ROI: Simple, quick calculation for basic investments
  • IRR: Accounts for when you receive money (important for rental income)
  • CAGR: Similar to annualized ROI, emphasizes compound growth
  • Use ROI for stocks bought once and sold once
  • Use IRR for real estate, businesses with ongoing cash flows
MetricWhat It MeasuresBest ForConsiders Timing?
ROITotal return %Simple investmentsNo
Annualized ROIYearly average returnComparing timeframesPartially
IRRReturn with cash flow timingComplex investmentsYes
CAGRCompound annual growthGrowth rate comparisonYes
Q

How do I calculate ROI including dividends?

Total ROI = (Capital Gains + Dividends) ÷ Initial Investment × 100. Example: Buy $10,000 stock, receive $500 dividends, sell for $11,000. Gain = $11,000 - $10,000 + $500 = $1,500. ROI = $1,500 ÷ $10,000 = 15%.

  • Capital gains: Sell price minus buy price
  • Income: Dividends, interest, rental income
  • Total return = Capital gains + Income
  • Don't forget to subtract fees and taxes for net ROI
  • Dividend reinvestment increases total return significantly

Many investors focus only on price appreciation, forgetting dividends. Historically, dividends account for about 40% of stock market total returns. When comparing investments, always use total return including all income, not just price change.

Q

What costs should I include when calculating ROI?

Include ALL costs: purchase price, transaction fees/commissions, taxes (capital gains), maintenance costs (real estate), management fees (funds), and any other expenses. Net ROI = (Total Returns - Total Costs) ÷ Total Costs.

  • Purchase costs: Price + commissions + fees
  • Holding costs: Management fees, maintenance, insurance
  • Selling costs: Commissions, transfer fees
  • Taxes: Capital gains tax on profits
  • Opportunity cost: What you could have earned elsewhere
Cost TypeStocksReal EstateMutual Funds
Buy costs$0-102-5% of price$0-load
Annual fees$0Taxes, insurance, maintenance0.03-1.5%
Sell costs$0-105-6% agent fees$0-load
Taxes0-20% cap gains0-20% cap gains0-20% cap gains

Example Calculations

1$10,000 Investment Growing to $15,000 in 5 Years

Inputs

Initial Investment$10,000
Final Value$15,000
Investment Period5 years

Result

Return on Investment50.0%
Total Profit$5,000
Total Return$15,000
Annualized ROI8.4%

Investing $10,000 and receiving $15,000 back after 5 years produces a 50% total ROI. The profit is $5,000 ($15,000 - $10,000). The annualized ROI is 8.4%, calculated as (15000/10000)^(1/5) - 1, meaning the investment effectively grew 8.4% per year compounded.

2$25,000 Investment Growing to $40,000 in 3 Years

Inputs

Initial Investment$25,000
Final Value$40,000
Investment Period3 years

Result

Return on Investment60.0%
Total Profit$15,000
Total Return$40,000
Annualized ROI17.0%

A $25,000 investment reaching $40,000 in 3 years yields a 60% total ROI with $15,000 profit. The annualized ROI is 17.0%, calculated as (40000/25000)^(1/3) - 1. This higher annualized return reflects the shorter holding period compared to the first example.

Formulas Used

Return on Investment (ROI)

ROI % = ((Final Value - Initial Investment) / Initial Investment) x 100

Measures the total percentage gain or loss on an investment relative to the initial cost.

Where:

ROI %= Return on investment as a percentage
Final Value= The ending value of the investment
Initial Investment= The original amount invested

Annualized ROI

Annualized ROI = ((Final Value / Initial Investment)^(1/Years) - 1) x 100

Converts total ROI into an average yearly return rate, accounting for compounding. Useful for comparing investments held for different time periods.

Where:

Annualized ROI= Average annual return percentage
Final Value= The ending value of the investment
Initial Investment= The original amount invested
Years= Number of years the investment was held

Understanding Return on Investment

ROI measures the profitability of an investment relative to its cost.

Annualized ROI allows comparison of investments with different time periods.

Higher ROI typically indicates better performance, but consider risk and time horizon.

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Last Updated: Feb 12, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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