ROI Calculator
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- Formula shown
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Results
ROI of 50% ($5,000 gain) over 5 years, or 8.45% a year annualized.
| Holding period | Annualized ROI |
|---|---|
| 1 year | 50% |
| 2 years | 22.47% |
| 3 years | 14.47% |
| 5 years | 8.45% |
| 7 years | 5.96% |
| 10 years | 4.14% |
| 15 years | 2.74% |
| 20 years | 2.05% |
| 30 years | 1.36% |
ROI ignores when money was added or taken out along the way. For several cash flows at different times, use the IRR calculator. Past returns do not predict future returns.
How to use the ROI calculator
- Enter the amount invested, including any purchase fees or commissions.
- Enter the amount returned: the sale proceeds after fees, or what the investment is worth today. Include any income it paid you.
- Enter how long you held it, either as a number of years or as start and end dates.
- Read the ROI and the annualized ROI. The table shows how the same total return looks over shorter and longer periods.
ROI formula
Annualized ROI = (amount returned ÷ amount invested)1/years − 1
ROI is the total gain as a share of what you put in. It says nothing about time, so a 50% return over 2 years and over 20 years look the same. The annualized ROI, also called the compound annual growth rate (CAGR), is the steady yearly rate that would turn the amount invested into the amount returned over the holding period. When you enter dates, the period is the number of days between them divided by 365.25.
Worked examples
You invest $10,000 and get back $15,000 after 5 years. The gain is $5,000, so the ROI is $5,000 ÷ $10,000 = 50%. Annualized, that is 1.51/5 − 1 = 8.45% a year: growing 8.45% a year for five years compounds to 50%. Entered as dates, 15 January 2021 to 15 January 2026 is 4.9993 years, which gives almost the same annualized figure.
A loss works the same way: $5,000 that becomes $4,200 over 3 years is an ROI of −16% and an annualized ROI of −5.65% a year. Be careful with short periods: a 10% gain in six months annualizes to 21%, which assumes the same pace would continue for a full year.
Annualized ROI by total return and holding period
| Years held | 25% total ROI | 50% total ROI | 100% total ROI | 200% total ROI |
|---|---|---|---|---|
| 1 | 25% | 50% | 100% | 200% |
| 3 | 7.72% | 14.47% | 25.99% | 44.22% |
| 5 | 4.56% | 8.45% | 14.87% | 24.57% |
| 10 | 2.26% | 4.14% | 7.18% | 11.61% |
| 20 | 1.12% | 2.05% | 3.53% | 5.65% |
| 30 | 0.75% | 1.36% | 2.34% | 3.73% |
Doubling your money (a 100% ROI) takes about 7.2% a year over 10 years, but only about 3.5% a year over 20 years.
Using ROI well
- Count every cost. Fees, commissions, taxes paid and money spent on improvements belong in the amount invested, or the ROI will look better than it was.
- Compare annualized figures. To compare investments held for different lengths of time, use the annualized ROI, not the total.
- Several deposits or withdrawals? Simple ROI assumes one amount in and one out. For regular contributions or uneven cash flows, use the IRR calculator, which accounts for when each amount moved.
- Inflation reduces real returns. A 4% annual ROI with 3% inflation is about 1% in purchasing power. The inflation calculator shows the effect.
- Past performance is not a forecast. A high historical ROI doesn't mean the next period will match it.
For year-by-year returns, try the average return calculator; to project growth forward, the investment calculator.
Frequently asked questions
How do I calculate ROI?
Subtract the amount invested from the amount returned, divide by the amount invested and multiply by 100. Investing $10,000 and getting back $15,000 is ($15,000 − $10,000) ÷ $10,000 = a 50% ROI.
What is annualized ROI?
The yearly compound rate that turns the amount invested into the amount returned over the holding period: (returned ÷ invested)^(1/years) − 1. A 50% ROI over 5 years is an annualized ROI of 8.45% a year.
What is the difference between ROI and CAGR?
ROI is the total return with no time attached. CAGR (annualized ROI) spreads it over the years held, so you can compare investments of different lengths. The same 50% ROI is 22.47% a year over 2 years but only 4.14% a year over 10 years.
Can ROI be negative?
Yes. If you get back less than you put in, the ROI is negative: $5,000 that becomes $4,200 is an ROI of −16%, or −5.65% a year over 3 years. Losing everything is an ROI of −100%.
When should I use IRR instead of ROI?
When money goes in or out more than once, such as regular contributions, dividends or rental income. Simple ROI assumes one amount in and one out; the IRR accounts for the timing of each cash flow.