What is the difference between ROI and annualized ROI?

Simple ROI shows total return percentage over the entire investment period. Annualized ROI (CAGR) shows the average yearly return rate, which is crucial for comparing investments held for different time periods. For example, 50% total return over 5 years is 8.4% annualized ROI.

How do I calculate ROI for investments with additional contributions?

For investments with regular contributions (like 401k or investment accounts), use time-weighted returns or calculate separate ROI periods for each contribution. This calculator works best for lump-sum investments or when contributions are minimal compared to the initial investment.

What ROI percentage is considered good?

Good ROI varies by investment type and market conditions. Stock market investments often target 7-10% annualized returns, real estate might target 8-12%, and business investments could target 15%+ due to higher risk. Compare against relevant benchmarks and your risk tolerance.

Can I use this calculator for losing investments?

Yes, ROI calculations work for losing investments too. A negative ROI simply means you lost money on the investment. This is valuable information for analyzing investment performance and avoiding similar mistakes in the future.

How do taxes affect ROI calculations?

This calculator shows pre-tax ROI. To calculate after-tax ROI, subtract estimated taxes from your final value or profit before calculating the return. Consider both capital gains taxes and ongoing tax implications for accurate profitability analysis.

What's a good ROI for different types of investments?

Stock market index funds often target 7-10% long-term annualized returns. Individual stocks can vary widely. Real estate investments might target 8-12% annual returns including appreciation and rental income. Business investments often target higher returns (15%+) due to increased risk and effort required.

ROI Calculator

Quickly determine return on investment (ROI) and annualized ROI to compare opportunities. Useful for business planning, marketing analysis, and investment evaluation.

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return-on-investment

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Common Investment Scenarios

Popular investment examples for quick ROI calculation

Investment Details & ROI Calculation Mode

Enter investment cost and choose calculation method

Calculation Mode

Investment Cost ($)

Final Value ($)

Time Period (years, optional)

ROI Formula

Simple ROI: (Profit ÷ Investment Cost) × 100

Annualized ROI: ((Final Value ÷ Initial Cost)^(1/years) - 1) × 100

How it works: Simple ROI shows total return percentage. Annualized ROI (CAGR) is better for comparing investments over different time periods by showing yearly growth rate.

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