ROI Calculator – Return on Investment
Calculate return on investment percentage and net profit
Table of Contents
How to Use
- Enter your initial investment amount
- Enter the final value of your investment
- Click calculate to see your ROI percentage
- Review your net profit and gain multiplier
What is ROI?
Return on Investment (ROI) is a financial metric used to evaluate the profitability of an investment. It measures the gain or loss generated relative to the amount invested, expressed as a percentage.
ROI is one of the most commonly used metrics for investment analysis due to its simplicity and versatility across different types of investments.
ROI Formula
| Formula | Description | Example |
|---|---|---|
| ROI = (Final - Initial) / Initial × 100 | Basic ROI percentage | ($15,000 - $10,000) / $10,000 = 50% |
| Net Profit = Final - Initial | Absolute gain or loss | $15,000 - $10,000 = $5,000 |
| Multiplier = Final / Initial | How many times your investment grew | $15,000 / $10,000 = 1.5x |
Interpreting ROI
- Positive ROI: Your investment gained value
- Negative ROI: Your investment lost value
- 100% ROI: You doubled your money
- Higher ROI isn't always better—consider risk and time horizon
ROI Limitations
- Does not account for the time period of investment
- Ignores opportunity cost of capital
- Doesn't consider risk or volatility
- May not capture all costs (fees, taxes, etc.)
Frequently Asked Questions
- What is a good ROI?
- A 'good' ROI depends on the investment type and risk level. Stock market investments average 7-10% annually. Real estate typically aims for 8-12%. Higher-risk investments should offer higher potential ROI to compensate for the risk.
- How is ROI different from profit?
- Profit is the absolute dollar amount gained, while ROI is a percentage that shows the return relative to your initial investment. A $1,000 profit from a $10,000 investment (10% ROI) is different from $1,000 profit on $100,000 (1% ROI).
- Can ROI be negative?
- Yes, ROI is negative when your investment loses value. A -20% ROI means you lost 20% of your initial investment.
- Should I use annualized ROI?
- Annualized ROI is useful for comparing investments held for different time periods. A 50% return over 5 years is less impressive than 50% return in 1 year. Consider using CAGR (Compound Annual Growth Rate) for multi-year investments.