ROI Calculator

ROI (Return on Investment) is the key metric for measuring whether any investment — stocks, real estate, business, or crypto — was profitable.

What this calculator does

Formula: ROI = (Final Value − Investment) / Investment × 100%.

How it works

Annualized ROI adjusts for time, making it easy to compare investments held for different durations.

When to use this calculator

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.

Common mistakes

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.

Real-world scenarios

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.

Formula

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

Worked example

You invest

0,000 in stocks. 3 years later the investment is worth
4,500.

  1. Profit =
    4,500 −
    0,000 = $4,500
  2. ROI = ($4,500 ÷
    0,000) × 100 = 45%
  3. Annualized ROI = (1.45^(1/3) − 1) × 100 = 13.2%/year

Result: ROI = 45% — annualized ROI = 13.2% per year

Frequently asked questions

What is a good ROI?

An ROI of 7–10% per year is typical for diversified stock market investments. Real estate averages 8–12% including appreciation.

How do you annualize ROI?

Annualized ROI = ((1 + ROI)^(1/years) − 1) × 100. This normalizes returns over different time periods.