A 'good' ROI depends on the investment type and time period. Stock market investments have historically returned around 10% annually. Real estate typically returns 8-12% annually including rental income. A savings account at 4.5% is good for a risk-free investment. Compare ROI to alternative uses of the same money.

ROI Calculator

Q: How do you calculate ROI?

ROI = (Net Profit / Cost of Investment) × 100. Net Profit = Final Value - Initial Investment + Income. For example, buying a stock for $10,000 that grows to $13,500 with $200 in dividends: ROI = (3,500 + 200) / 10,000 × 100 = 37%.

Calculate return on investment, net profit, annualized ROI, and compare multiple investments.

Calculate total ROI and annualized ROI (CAGR) for any investment.

Initial Investment ($)

Final Value ($)

Additional Income (dividends, rent, $ optional)

Holding Period (years, optional)

Total ROI
—

Net Profit

—

Annualized ROI (CAGR)

—

Compare ROI of up to 3 investments side by side to find the best performer.

Investment A

Cost ($)

Final Value ($)

Years

Investment B

Cost ($)

Final Value ($)

Years

Investment C

Cost (optional)

Final Value

Years

Investment	Cost	Profit	Total ROI	Annual ROI

Calculate total ROI on a real estate investment including rental income, expenses, and appreciation.

Purchase Price ($)

Down Payment ($)

Monthly Rent Income ($)

Monthly Expenses (mortgage, tax, insurance, $)

Current/Sale Value ($)

Holding Period (years)

Total ROI
—

Cash-on-Cash Return

—

Annual ROI

—

ROI — The Most Fundamental Investment Metric

ROI is the simplest and most universal way to evaluate any financial decision. It answers one basic question: for every dollar I put in, how many dollars came out? The formula is remarkably simple and works equally well for evaluating a stock purchase, a rental property, a business investment, or even a marketing campaign.

ROI = (Net Profit / Cost) × 100 Net Profit = Final Value − Initial Cost + Any Income Received Annualized ROI (CAGR) = (Final Value / Initial Value)^(1/years) − 1

Stock investment example:
Bought 100 shares at $80 = $8,000 invested
Sold at $110 = $11,000 + received $400 in dividends
Net profit = $11,000 − $8,000 + $400 = $3,400
ROI = $3,400 / $8,000 × 100 = 42.5%
If held 3 years: CAGR = (11,000/8,000)^(1/3) − 1 = 11.2% per year

Why Annualized ROI Matters

A 50% ROI sounds great — but was it achieved in 1 year or 10 years? Comparing ROI across investments with different time periods requires annualizing it (CAGR). A 50% return in 1 year (50% CAGR) far outperforms a 50% return in 5 years (8.4% CAGR). Always compare investments using annualized figures.

ROI vs Other Return Metrics

ROI is simple but doesn't account for time value of money (a dollar today is worth more than a dollar in 10 years). More sophisticated metrics like IRR (Internal Rate of Return) and NPV (Net Present Value) handle this better for long-term or multi-period investments. But for quick comparisons and straightforward single-investment evaluations, ROI remains the most accessible and widely-used metric.

Frequently Asked Questions

How do you calculate ROI?

ROI = (Net Profit / Cost) × 100. Net Profit = Final Value − Initial Cost + Income Received. Example: $10,000 investment grows to $13,000 with $200 in dividends. Net profit = $3,200. ROI = 3,200/10,000 × 100 = 32%.

What is a good ROI?

It depends on the risk level and investment type. Stock market index funds historically return ~10% annually. Real estate typically 8-12%. Risk-free savings accounts offer 4-5% currently. A "good" ROI always needs context — a 15% return on a speculative investment is less impressive than a 10% return from a diversified index fund.

What is the difference between ROI and CAGR?

ROI is the total return over the entire investment period regardless of time. CAGR (Compound Annual Growth Rate) is the smoothed annual rate that would produce the same total return. CAGR = (Final/Initial)^(1/years) − 1. Use CAGR to compare investments held for different time periods on equal footing.

What is cash-on-cash return in real estate?

Cash-on-cash return measures the annual cash income relative to the cash invested (down payment + closing costs). It's calculated as: Annual Net Cash Flow / Total Cash Invested × 100. A property generating $6,000/year net cash flow on a $60,000 down payment has a 10% cash-on-cash return. It doesn't include appreciation, making it useful for evaluating current income performance.

ROI Calculator

ROI — The Most Fundamental Investment Metric

Why Annualized ROI Matters

ROI vs Other Return Metrics

Frequently Asked Questions

Related Calculators