ROI (Return on Investment) measures profitability: (Final Value − Initial Investment) ÷ Initial Investment × 100.

What is the difference between total ROI and annualized ROI?

Total ROI shows the overall gain. Annualized ROI (CAGR) converts it to a yearly rate, enabling fair comparison between investments with different time horizons.

The S&P 500 averages roughly 10% annual ROI historically. Context and risk level matter as much as the number itself.

ROI Calculator

Calculate the return on investment for any asset, project, or business decision.

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Parameters

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Initial Investment

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Final Value

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Investment Period

yrs

1 yrs50 yrs

Results

Total ROI

Annualized ROI

Net Profit

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ROI Breakdown

Investment vs return comparison

Results are for informational purposes only and do not constitute financial advice. Actual returns may vary due to market conditions, taxes, and fees. Read our full disclaimer.

What is Return on Investment (ROI)?

Return on Investment (ROI) is the most widely used metric for evaluating the profitability of an investment. The formula is simple: ROI = (Final Value − Initial Investment) ÷ Initial Investment × 100. A 50% ROI means you gained half your original investment back as profit. ROI is used everywhere — from evaluating stock purchases to assessing business projects, real estate deals, and marketing campaigns.

Total ROI vs Annualized ROI

Total ROI tells you how much you made over the entire investment period. Annualized ROI (also called CAGR — Compound Annual Growth Rate) tells you the equivalent yearly return. A 100% total ROI over 10 years sounds impressive, but the annualized ROI is only 7.2% per year — roughly in line with a broad index fund. Comparing investments with different time horizons requires annualized ROI, not total ROI. A 50% return in 2 years is far better than a 100% return in 20 years.

Limitations of ROI

ROI does not account for risk, inflation, or the time value of money. Two investments with identical ROI can have very different risk profiles. A 10% ROI from a government bond and a 10% ROI from a speculative startup are not equivalent. For more sophisticated investment analysis, consider using Net Present Value (NPV) alongside ROI — NPV accounts for when cash flows occur and the opportunity cost of capital. Use the ROI calculator for quick comparisons, but always factor in risk and time horizon for final decisions.