ROI Calculator
Calculate return on investment, annualized return, and net profit.
Frequently Asked Questions
What is ROI and how is it calculated?
ROI (Return on Investment) measures profit relative to cost. The formula is: ROI = ((Final Value − Initial Investment) / Initial Investment) × 100. For example, investing $10,000 that grows to $14,500 gives an ROI of 45%.
What is a good ROI?
It depends on asset class and risk. The S&P 500 has historically returned 7–10% annually (inflation-adjusted). Real estate typically yields 8–12%. A business investment might target 15–30%. Always compare ROI against the risk taken and opportunity cost of alternatives.
What is the difference between ROI and annualized return?
ROI is the total percentage gain over the entire holding period. Annualized return converts that to a consistent per-year rate using: (1 + ROI/100)^(1/years) − 1. For example, a 50% ROI over 4 years equals an annualized return of about 10.67% per year.
How do I calculate ROI on a rental property?
For real estate, ROI = (Annual Rental Income − Annual Costs) / Total Investment × 100. Include mortgage payments, taxes, insurance, maintenance, and vacancy in your costs. A common benchmark is 8–12% cash-on-cash return for a good rental investment.
Does ROI account for inflation?
Standard ROI does not adjust for inflation. To calculate real (inflation-adjusted) ROI: Real ROI = ((1 + Nominal ROI) / (1 + Inflation Rate)) − 1. With a 10% nominal ROI and 3% inflation, your real ROI is approximately 6.8%.