ROI Calculator — Return on Investment
Work out the return on any investment — and see the annualised rate so you can compare apples to apples across different time horizons.
Understanding ROI
ROI (Return on Investment) is the most universal measure of investment performance. It tells you how much you gained (or lost) for every dollar you put in.
Simple ROI formula
ROI = ((Final − Initial) ÷ Initial) × 100
Annualized ROI formula
Annual ROI = ((1 + ROI/100)1/years − 1) × 100
Annualizing is essential when comparing investments held for different periods. A 50% total return over 10 years is only about 4.1% per year — worse than many savings accounts.
Quick reference
| Investment type | Typical annualized ROI |
|---|---|
| High-yield savings account | 4–5% |
| Government bonds | 3–5% |
| Real estate | 8–12% |
| S&P 500 index fund (historical avg) | ~10% |
| Small business | 15–30%+ (highly variable) |
Frequently asked questions
What is ROI?
ROI stands for Return on Investment. It measures how much profit or loss you made relative to the amount you invested, expressed as a percentage. A positive ROI means you made money; a negative ROI means you lost money.
How is ROI calculated?
Simple ROI = ((Final Value − Initial Investment) ÷ Initial Investment) × 100. For example, if you invested $1,000 and it's now worth $1,250, your ROI is ((1250 − 1000) ÷ 1000) × 100 = 25%.
What is annualized ROI and why does it matter?
Simple ROI doesn't account for how long the investment was held. A 25% return over 10 years is very different from 25% in 1 year. Annualized ROI converts the total return into a per-year equivalent, letting you compare investments held for different time periods on a level playing field. The formula is: Annualized ROI = ((1 + ROI/100)^(1/years) − 1) × 100.
What is a good ROI?
It depends on the type of investment and the time period. The S&P 500 has historically returned around 10% per year on average. Real estate often returns 8–12%. A simple savings account might offer 4–5%. For a business, a ROI of 20%+ is generally considered strong, though it varies by industry.
Does ROI account for inflation?
Standard ROI does not adjust for inflation. If you want a 'real' ROI, subtract the inflation rate from your annualized return. For example, a 7% annualized return with 3% inflation gives a real return of about 4%.
CalcOrchard is a free educational tool. ROI calculations are simplified and do not account for taxes, fees, dividends, or inflation. This is not financial advice.