ROI Calculator
An ROI calculator measures the gain or loss relative to the amount invested. It can compare projects or investments with similar risk and timing, while annualized return helps compare holding periods of different lengths.
Quick answer
ROI equals net gain divided by total invested cost. A positive percentage means the ending value and income exceeded the cost, but it does not measure risk, taxes, inflation, or the path of returns.
Calculator
How to use this calculator
- Enter the initial and additional costs.
- Enter the ending value and cash income received.
- Enter the holding period for annualized return.
- Compare ROI with risk, liquidity, taxes, and alternatives.
Explanation
What it is
An ROI calculator measures the gain or loss relative to the amount invested. It can compare projects or investments with similar risk and timing, while annualized return helps compare holding periods of different lengths.
How it works
The calculator adds initial and additional costs, subtracts that total from ending value plus cash income, and divides the gain by cost. Annualized return converts the total growth into an equivalent compound yearly rate.
When to use it
Use the roi calculator when comparing options, setting a realistic target, or checking whether a proposed financial decision fits your broader plan.
Limitations
- The result is an estimate based on the amounts, rates, timing, and assumptions entered.
- Actual product terms, taxes, fees, eligibility rules, and market conditions can change the outcome.
- Use official disclosures or a qualified professional before making a binding financial decision.
Key terms
- ROI
- Net gain or loss divided by invested cost.
- Cost basis
- The amount invested, adjusted for included costs.
- Annualized return
- A compound annual rate equivalent to the total holding-period return.
- Value multiple
- Ending value plus income divided by total invested cost.
Formula
The calculator adds initial and additional costs, subtracts that total from ending value plus cash income, and divides the gain by cost. Annualized return converts the total growth into an equivalent compound yearly rate.
Worked example
An investment costing $10,500 in total that ends at $12,500 and paid $600 has a $2,600 gain and an ROI of about 24.76%.
FAQ
What is a good ROI?
There is no universal good ROI. Compare returns with the investment’s risk, time horizon, liquidity, taxes, inflation, and a relevant benchmark.
What is the difference between ROI and annualized return?
ROI measures the total gain over the entire period, while annualized return expresses growth as an equivalent yearly compound rate.
Can ROI be negative?
Yes. ROI is negative when ending value plus income is less than total invested cost.
Does ROI include dividends or rental income?
It can if you enter that cash in the income field. Keep your treatment of reinvested income and fees consistent.
Why can a high ROI still be a bad investment?
ROI alone can ignore risk, time, leverage, taxes, concentration, volatility, and whether the result is repeatable.
Common mistakes
- Using an advertised rate without checking whether it applies to the full balance or term.
- Leaving out fees, taxes, timing differences, or irregular cash flows.
- Treating a planning estimate as a guaranteed quote or final professional calculation.
Tips
- Run a conservative scenario as well as an optimistic one.
- Change one assumption at a time so you can see what drives the result.
- Save or export the calculation and update it when rates, costs, or goals change.
Sources and editorial review
Educational estimates only; not personalized financial, tax, legal, lending, investment, or insurance advice.