ROI Calculator: Measure Your Investment Returns
Learn how to calculate return on investment, compare different investments, and understand what makes a good ROI.
ROI (Return on Investment) measures the profitability of an investment as a percentage of its cost. It's one of the simplest and most widely used financial metrics.
ROI Formula
ROI = (Net Profit / Cost of Investment) × 100. If you invest $1,000 and earn $1,200, your net profit is $200. ROI = ($200 / $1,000) × 100 = 20%.
Annualized ROI
For investments held multiple years, calculate annualized ROI: ((1 + ROI)^(1/years)) - 1. A 50% return over 3 years equals about 14.5% annually.
ROI vs Other Metrics
- ROI: Simple percentage return, ignores time value of money
- NPV: Accounts for time value of money, shows dollar value
- IRR: The discount rate that makes NPV equal to zero
What Is a Good ROI?
Depends on risk and time horizon. Stock market averages 7-10% annually. Real estate typically 8-12%. Business investments vary widely. Always compare ROI to risk-free alternatives like treasury bonds.