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Simple Calculators

ROI Calculator

Calculate return on investment with all costs included — plus annualized ROI for fair multi-year comparisons

Investment

Sale proceeds or current value

Fees, maintenance, improvements

0 to skip annualized ROI

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All business

Quick summary

ROI is net gain divided by total cost: a $10,000 investment sold for $15,000 returns 50%. Include every cost (fees, maintenance, improvements) in the basis or your ROI overstates reality. For multi-year investments, use annualized ROI (CAGR) — a 50% gain over 5 years is only 8.45% per year, which is the right number to compare against market benchmarks.

Reviewed by Simple Calculators TeamLast reviewed

How to use this calculator

  1. Enter the inputs requested by the calculator.
  2. Choose the units or options that match your situation and review the assumptions.
  3. Run or update the calculation to see the result.
  4. Review the result, breakdown, and formulas shown on the page.
  5. Check the inputs, units, dates, and limitations before saving or sharing the result.

ROI Formulas

Simple ROI

ROI=Final Value−Total CostTotal Cost×100ROI = \frac{\text{Final Value} - \text{Total Cost}}{\text{Total Cost}} \times 100
Final Value
Sale proceeds or current value of the investment
Total Cost
Initial investment plus all additional costs

Worked example

A $10,000 investment sold for $15,000

Given
Final Value = $15,000
Total Cost = $10,000
Calculation
ROI=15000−1000010000×100ROI = \frac{15000 - 10000}{10000} \times 100
Result
ROI = 50%

Annualized ROI (CAGR)

Annualized ROI=((FinalCost)1/n−1)×100\text{Annualized ROI} = \left(\left(\frac{\text{Final}}{\text{Cost}}\right)^{1/n} - 1\right) \times 100
n
Holding period in years

Worked example

The same 50% gain earned over 5 years

Given
Final ÷ Cost = 1.5
n = 5 years
Calculation
(1.51/5−1)×100\left(1.5^{1/5} - 1\right) \times 100
Result
Annualized ROI ≈ 8.45%

Frequently asked questions

How do I calculate ROI?

Subtract total cost from final value, divide by total cost, multiply by 100. Buy at $10,000 with $2,000 in fees, sell at $15,000: ROI = (15,000 − 12,000) ÷ 12,000 = 25%. Forgetting the $2,000 of costs would wrongly show 50%.

What is a good ROI?

Context matters: the US stock market has historically returned about 10% annually (7% after inflation), so an investment should beat that after adjusting for risk and effort. Businesses often target 15–30%+ on internal projects; rental real estate investors commonly look for 8–12% annually.

Why does annualized ROI matter?

Simple ROI ignores time — 50% over 1 year is exceptional, but 50% over 10 years (4.1%/year) trails savings accounts in some eras. Annualizing converts any holding period to a per-year rate so different investments compare fairly.

What's the difference between ROI and CAGR?

ROI is the total percentage gain over the whole period; CAGR (compound annual growth rate) is the equivalent constant yearly rate. This calculator reports both — CAGR is what you compare against annual benchmarks like the S&P 500.

Does ROI account for risk?

No — two investments with equal ROI can carry very different risk. A guaranteed 6% differs fundamentally from a volatile 6% average. Use ROI alongside judgment about downside, liquidity, and effort rather than as a standalone verdict.

Key terms

Cost Basis
Everything you put in — purchase price plus fees, commissions, and improvement costs. The denominator of honest ROI.
CAGR
Compound Annual Growth Rate — the constant yearly return that would produce the same total gain over the holding period.
Investment Multiple
Final value ÷ cost, e.g. 1.5× means every dollar became $1.50. Common in private investing.
Nominal vs Real Return
Nominal ignores inflation; real subtracts it. A 5% return during 3% inflation is a 2% real gain.

Methodology, sources & limitations

This page shows the formula, assumptions, and limitations used for this estimate. Rates, thresholds, and other time-sensitive inputs can change, so verify them against the relevant official source before relying on a result.

For our review approach and the primary sources we consult, see the methodology and source policy. If you spot an outdated figure or formula, please contact us with a correction.