Free ROI Calculator
Calculate return on investment, gain or loss and annualized ROI (CAGR) from years or dates, and compare two investments side by side.
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How to calculate ROI and annualized return
Enter what you put in and what you got back to see your total return on investment. Add how long you held it, in years or by dates, to see the annualized return and compare two options fairly.
- Enter the amount invested and the amount returned, including any income received.
- Choose a period as a number of years or as start and end dates.
- Read the gain or loss, the total ROI and the annualized ROI.
- Tick Compare two investments and fill in the second one to see which grew faster per year.
- Copy the results to keep a record.
When to use an ROI calculator
Return on investment is the quickest way to see whether money you put into something paid off. It works for stocks and funds, a rental property, a piece of equipment, a marketing campaign or a side business. You only need two numbers, what went in and what came out, to see the gain and the percentage return.
Total ROI has a weakness: it ignores time. A 50 percent gain over ten years is far less impressive than the same gain in two. That is why this tool also calculates annualized ROI, the steady yearly growth rate, and lets you compare two investments with different holding periods on equal terms.
Businesses use the same math to judge projects. If new software costs 4,000 dollars and saves 6,000 dollars in staff time over two years, the ROI is 50 percent. Entering the two years shows the annualized figure, which is easier to weigh against other uses of the money.
Worked example: two investments compared
Investment A cost 10,000 dollars and was worth 15,000 dollars five years later. The gain is 5,000 dollars and the ROI is 50 percent. The annualized ROI is 8.45 percent a year, because 10,000 dollars growing at 8.45 percent for five years reaches 15,000 dollars. If you enter the dates January 1, 2020 to January 1, 2025 instead, the period is 5.002 years and the annualized figure is 8.44 percent.
Investment B cost 8,000 dollars and returned 10,000 dollars after two years. Its gain is 2,000 dollars and its ROI is only 25 percent, half that of A. Yet its annualized ROI is 11.80 percent, so B grew faster each year. With both entered, the calculator reports that Investment B has the higher annualized return by 3.36 percentage points.
How ROI and annualized ROI are calculated
Gain is the amount returned minus the amount invested. ROI is the gain divided by the amount invested, times 100. Annualized ROI is (amount returned divided by amount invested) to the power of 1 divided by the number of years, minus 1, times 100. This is the same formula as compound annual growth rate.
When you use dates, the period is the number of days between them divided by 365.25. When you use years, you can enter fractions such as 2.5. Setting years to 0 skips the annualized figure, since a yearly rate needs a time span.
Common mistakes to avoid
Leaving out income is a frequent error. Dividends, interest, rent or cash taken out along the way are part of the return, so add them to the amount returned. Likewise, include costs such as purchase fees, commissions and repairs in the amount invested, or your ROI will look better than it was.
The simple formulas here assume one investment at the start and one value at the end. If you added or withdrew money during the period, the result is only approximate. Taxes and inflation are not included either. Treat the results as general information rather than investment advice.
Useful tips and limitations
- Compare investments by annualized ROI, since total ROI ignores how long the money was tied up.
- Include dividends, interest or rent in the amount returned so the ROI reflects the full return.
- Use the dates option when holding periods are uneven, such as 19 months, for a more accurate annualized figure.
- Pair the result with the inflation calculator to see whether your return beat rising prices.
Common questions
What is the difference between ROI and annualized ROI in this ROI calculator?
ROI is the total percentage gain over the whole period. Annualized ROI, also called CAGR, is the steady yearly rate that would turn the amount invested into the amount returned over that time.
How does the ROI calculator count the period from dates?
It counts the calendar days between the two dates and divides by 365.25 to get years.
Can the ROI calculator show a loss?
Yes. If the amount returned is less than the amount invested, the gain, ROI and annualized ROI are negative.
Why can a lower ROI have a higher annualized return in the ROI calculator?
Annualized ROI spreads the gain over time. A smaller gain earned in a short period can mean faster yearly growth than a bigger gain earned over many years.
Does the ROI calculator account for money added during the investment?
No. It assumes one amount invested at the start and one amount returned at the end. Extra deposits or withdrawals in between make the result approximate.
What does a negative annualized ROI mean in the ROI calculator?
It means the investment lost value. The figure shows the steady yearly rate of decline that would turn the amount invested into the smaller amount returned.
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