Investing
ROI Calculator: How to Calculate Return on Investment
An ROI calculator tells you how much you made or lost on an investment compared with what you put in. ROI, or return on investment, is one of the simplest ways to compare a stock, a rental property, a business project or a side hustle. This guide explains the formula in plain words, walks through a full example and shows why the time you held an investment matters. When you are ready, run your own numbers in the [ROI Calculator](/calculators/roi-calculator).
By the MoneyTools Editorial TeamLast updated 7 min readEditorial Policy
What ROI means
ROI measures your gain as a share of what you invested. You take the money you ended up with, subtract what it cost you, and divide by that cost. A positive ROI means you made money; a negative ROI means you lost money.
Because ROI is a percentage, it lets you compare investments of different sizes. Making $500 on $1,000 (50%) is a better return than making $2,000 on $20,000 (10%), even though the second gain is bigger in dollars.
The ROI formula, with a worked example
ROI (%) = (Final value − Cost) ÷ Cost × 100
- Final value
- What the investment is worth or sold for, plus any income received
- Cost
- Everything you paid in, including fees
Worked example
ROI calculator example
- Amount invested (cost): $10,000
- Final value: $13,500
- Gain: $13,500 − $10,000 = $3,500
- ROI: $3,500 ÷ $10,000 × 100 = 35%
This investment returned 35% on the money put in.
| Item | Amount |
|---|---|
| Cost | $10,000 |
| Final value | $13,500 |
| Gain | $3,500 |
| ROI | 35% |
ROI vs annualized return
Basic ROI ignores time. A 35% gain sounds the same whether it took one year or five, but it is not. Annualized return spreads the gain over each year so you can compare fairly.
Annualized return = (Final value ÷ Cost)^(1 ÷ years) − 1
| Holding period | Total ROI | Annualized return |
|---|---|---|
| 1 year | 35% | 35.0% a year |
| 5 years | 35% | about 6.2% a year |
Held for five years, the same 35% works out to only about 6.2% a year. For growth over several years, the CAGR Calculator does this math for you.
Good vs bad ROI: rough benchmarks by asset type
There is no single "good" ROI. It depends on risk, time and what else you could have done with the money. These broad ranges are long-run historical averages often quoted for US assets, not predictions:
- Savings accounts and CDs: low but steady; usually close to current deposit rates.
- Bonds: historically lower than stocks, with smaller swings.
- Broad US stock index funds: historically around 7%–10% a year on average over long periods, with big ups and downs along the way.
- Rental property: varies widely with location, financing, repairs and vacancy.
- Small business or side projects: can be very high or negative; risk is much higher.
Past returns do not guarantee future results. Compare an ROI with the risk you took, not just the number.
Run your own numbers in the ROI calculator
Enter what you invested and what it is worth now in the ROI Calculator. Add the holding period to see the annualized figure. To project future growth with regular deposits, try the Investment Calculator.
Run your own numbers
Measure the return on investment for any purchase or project.
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