ROI Calculator
Calculate return on investment, annualized ROI, and net profit from any investment.
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Understanding ROI
Return on Investment (ROI) measures the profitability of an investment relative to its cost. It's one of the most widely used financial metrics for evaluating investment performance.
ROI Formula: ROI = (Net Profit / Cost of Investment) x 100
Annualized ROI Formula: Annualized ROI = ((1 + ROI)^(1/n) - 1) x 100, where n = number of years
- Annualized ROI normalizes returns to a yearly rate, making it easy to compare investments of different durations
- A positive ROI means the investment gained value; negative means a loss
- The S&P 500 has historically returned about 10% annually (before inflation)
- Always consider inflation: a 5% return with 3% inflation is only ~2% real return