ROI (Return on Investment) is the key metric for measuring whether any investment — stocks, real estate, business, or crypto — was profitable.
Formula: ROI = (Final Value − Investment) / Investment × 100%.
Annualized ROI adjusts for time, making it easy to compare investments held for different durations.
Use this calculator whenever you need to compare returns across opportunities that differ in size, duration, or structure. A marketing team comparing channels, a property investor comparing two cities, a business weighing equipment purchase against outsourcing — in each case, ROI converts incomparable numbers into a single percentage that reveals which option genuinely delivered more per pound or dollar invested.
The classic ROI error is forgetting that the formula ignores time. Presenting a '200% ROI' from a 15-year real estate holding sounds far more impressive than a '12% annualised return' — but the latter is the accurate comparison metric. A second pitfall is excluding ongoing costs from the initial investment figure: a machine that costs £50,000 to buy but £8,000/year to maintain has a very different ROI profile than one costing £70,000 with £2,000/year maintenance, despite the lower purchase price of the first option.
A business spends £12,000 on a targeted advertising campaign and attributes £48,000 in new revenue to it — net profit of £36,000, ROI of 300%. A property bought for £200,000 sells for £320,000 after 8 years. The simple ROI is 60%, but the annualised CAGR is only 6% — informative context before celebrating. Both calculations are available in a single run through this calculator.
Return on Investment (ROI) Formula
ROI = ((Final Value − Initial Cost) ÷ Initial Cost) × 100
For annualized ROI: Annualized ROI = ((1 + ROI/100)^(1/years) − 1) × 100
You invest
Result: ROI = 45% — annualized ROI = 13.2% per year
An ROI of 7–10% per year is typical for diversified stock market investments. Real estate averages 8–12% including appreciation.
Annualized ROI = ((1 + ROI)^(1/years) − 1) × 100. This normalizes returns over different time periods.
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