📊 ROI Calculator
Calculate the Return on Investment for stocks, real estate, business ventures, and marketing campaigns. Compare annualized returns across multiple investments.
Enter up to 4 investments to compare their ROI side by side.
| Investment | Invested | Final Value | Net Profit | Total ROI | Annualized ROI |
|---|
What is ROI (Return on Investment)?
Return on Investment (ROI) is a financial metric used to evaluate the efficiency and profitability of an investment. It measures the gain or loss generated relative to the amount of money invested, expressed as a percentage. ROI is one of the most widely used performance indicators in business, real estate, stock trading, digital marketing, and personal finance.
ROI = ((Final Value − Initial Cost) ÷ Initial Cost) × 100Annualized ROI (CAGR) Formula:
Annualized ROI = ((Final Value ÷ Initial Cost)^(1 ÷ Years) − 1) × 100Real Estate ROI Formula:
ROI = ((Net Rental Income + Appreciation Gain) ÷ Total Investment) × 100
How to Interpret ROI Results
- Positive ROI (+): The investment generated a profit. A 50% ROI means you earned $0.50 for every $1.00 invested.
- Zero ROI (0%): You broke even — you got back exactly what you put in.
- Negative ROI (−): The investment resulted in a loss. A −20% ROI means you lost $0.20 for every $1.00 invested.
What is a "Good" ROI?
A "good" ROI depends entirely on the investment type, risk level, and time horizon:
| Investment Type | Average Annual ROI | Risk Level | Time Horizon |
|---|---|---|---|
| S&P 500 Index Fund | ~10% (historical avg) | Moderate | 10+ years |
| US Treasury Bonds | ~4% – 5% | Very Low | 1–30 years |
| Real Estate (Rental) | ~8% – 15% | Moderate | 5–20 years |
| Real Estate (Flipping) | ~15% – 30% | High | 3–12 months |
| High-Yield Savings | ~4% – 5.25% | None (FDIC) | Any |
| Individual Stocks | −50% to +500%+ | Very High | 1–10 years |
| Cryptocurrency | −90% to +1000%+ | Extreme | 1–5 years |
| Small Business | ~15% – 30% | High | 3–10 years |
| Digital Marketing (PPC) | ~200% – 500%+ | Variable | 1–6 months |
Simple ROI vs. Annualized ROI: Why the Difference Matters
Simple ROI tells you the total return over the entire holding period, but it doesn't account for time. A 100% ROI sounds impressive, but if it took 20 years to achieve, that's only about 3.5% per year — barely beating inflation.
Annualized ROI (CAGR — Compound Annual Growth Rate) normalizes returns to a per-year basis, allowing you to fairly compare investments held for different lengths of time.
- Investment A: 100% ROI over 10 years = 7.18% annualized
- Investment B: 60% ROI over 3 years = 16.96% annualized
Despite having a lower total ROI, Investment B is the far superior performer on an annualized basis.
Real Estate ROI: Key Metrics Explained
Cap Rate (Capitalization Rate)
The Cap Rate measures the annual net operating income (NOI) as a percentage of the property's current market value. It's the most common metric for comparing rental properties.
Cap Rate = (Annual Net Operating Income ÷ Property Value) × 100
Cash-on-Cash Return
Cash-on-Cash return measures the annual pre-tax cash flow relative to the actual cash invested (down payment + closing costs), not the total property value. This is the most relevant metric for leveraged real estate investments.
Cash-on-Cash = (Annual Cash Flow ÷ Total Cash Invested) × 100
Limitations of ROI
- Doesn't account for risk: A 20% ROI from a volatile crypto investment is not equivalent to a 20% ROI from a government bond.
- Ignores time value of money: Simple ROI treats a dollar earned today the same as a dollar earned 10 years from now.
- Excludes hidden costs: Transaction fees, taxes, maintenance, and opportunity costs can significantly reduce actual returns.
- Not suitable for comparing different time periods: Use annualized ROI (CAGR) instead for fair comparisons.
Frequently Asked Questions
The S&P 500 has historically returned an average of ~10% annually before inflation (approximately 7% after inflation). A diversified stock portfolio consistently achieving 8%–12% annualized returns over a 10+ year period is considered excellent performance.
Add up all annual rental income, subtract operating expenses (property tax, insurance, maintenance, vacancy, management fees), then add any property appreciation. Divide the total net gain by your total cash investment (down payment + closing costs + renovations) and multiply by 100.
Yes. A negative ROI means the investment lost money. For example, if you invested $10,000 and the final value is $7,000, your ROI is −30%. Negative ROI is common in volatile markets, failed business ventures, and declining real estate markets.
ROI measures total return as a simple percentage. IRR (Internal Rate of Return) is a more sophisticated metric that accounts for the timing of all cash flows (investments and returns) over the life of the project. IRR is preferred for complex investments with irregular cash flows, such as private equity and real estate development.
Marketing ROI = ((Revenue from Campaign − Campaign Cost) ÷ Campaign Cost) × 100. For example, if you spent $5,000 on Google Ads and generated $25,000 in attributable sales, your Marketing ROI is (($25,000 − $5,000) ÷ $5,000) × 100 = 400%. A 5:1 revenue-to-cost ratio is generally considered excellent for digital marketing.