Determine the Return on Investment (ROI) and annualized return for your business or personal investments.
Return on Investment (ROI) is the universal metric for evaluating the efficiency of an investment. Whether you are buying stocks, investing in real estate, or launching a marketing campaign, calculating ROI helps you determine if the financial gain justifies the initial cost. Our ROI Calculator goes a step further by providing both the total return and the Annualized ROI, which is critical for comparing investments held over different time periods.
The basic formula for ROI is straightforward. It measures the gain or loss generated on an investment relative to the amount of money invested.
Example: You purchase $1,000 worth of Bitcoin. A month later, you sell it for $1,200.
Net Profit = $1,200 - $1,000 = $200.
ROI = ($200 / $1,000) × 100 = 20%.
This is where many investors get tripped up. Total ROI tells you how much you made in total, but it ignores time. Annualized ROI tells you how much you made per year.
Investment A: 20% return in 1 year.
Investment B: 20% return in 5 years.
Investment A is significantly better. Its annualized return is 20%. Investment B's annualized return is only about 3.7%.
Compare the performance of different stocks or mutual funds against benchmark indices like the S&P 500.
Calculate the return on rental properties, factoring in rental income and property appreciation.
Determine if your ad spend is generating enough sales to be profitable (ROAS - Return on Ad Spend).
While useful, ROI has limitations. It doesn't account for risk. A 50% ROI looks great, but if it came from a highly volatile cryptocurrency that could have gone to zero, the risk-adjusted return might be poor. It also doesn't account for taxes or transaction fees unless you manually deduct them from the "Amount Returned".
It depends on the asset class. Historically, the stock market averages 7-10% annually. Real estate investors often look for 8-12%. High-risk venture capital might seek 30%+.
Simply use our tool! The "Investment Period" field allows you to input the number of years. We automatically calculate the Annualized ROI using the CAGR (Compound Annual Growth Rate) formula.