ROI calculator (return on investment)
ROI answers one question: how much did I gain or lose relative to what I put in? Use it for stocks, a business project, a marketing campaign, or a side hustle. When time matters, also look at CAGR (annualized ROI).
With $10,000 invested and a final value of $15,000 after 3 years:
- Net profit: $5,000
- Total ROI: 50%
- Annualized ROI (CAGR): 14.47%
Formula: ROI = (15,000 − 10,000) / 10,000 × 100 = 50%.
Formula
ROI (%) = ((Final value − Initial investment) / Initial investment) × 100
CAGR (%) = ((Final value / Initial investment)^(1/years) − 1) × 100
Net profit = Final value − Initial investment
Total ROI does not divide by time. A 50% ROI over 1 year is very different from 50% over 5 years: CAGR normalizes to an annual compounded rate.
Step-by-step example (defaults)
- Initial investment = $10,000
- Final value = $15,000
- Net profit = 15,000 − 10,000 = $5,000
- ROI = 5,000 / 10,000 × 100 = 50%
- Horizon = 3 years → CAGR = (1.5)^(1/3) − 1 ≈ 14.47% per year
Scenario table (same engine logic)
Values rounded to 2 decimals like the calculator.
| Initial investment | Final value | Years | Total ROI | CAGR | Net profit |
|---|---|---|---|---|---|
| $10,000 | $15,000 | 3 | +50.00% | +14.47% | +$5,000.00 |
| $10,000 | $15,000 | 1 | +50.00% | +50.00% | +$5,000.00 |
| $5,000 | $7,500 | 2 | +50.00% | +22.47% | +$2,500.00 |
| $20,000 | $18,000 | 1 | −10.00% | −10.00% | −$2,000.00 |
| $8,000 | $12,000 | 4 | +50.00% | +10.67% | +$4,000.00 |
| $1,000 | $2,000 | 5 | +100.00% | +14.87% | +$1,000.00 |
Compound growth of $10,000 over 10 years
If returns compound each year, ending value grows faster than a naive “linear” view. Educational reference only: not a return promise:
| Annual rate | Approx. final value | Total gain |
|---|---|---|
| 5% | $16,289 | $6,289 |
| 8% | $21,589 | $11,589 |
| 10% | $25,937 | $15,937 |
| 12% | $31,058 | $21,058 |
| 15% | $40,456 | $30,456 |
The gap between 8% and 12% over 10 years is nearly $10,000 on the same $10,000 base.
What counts as a “good” ROI?
It depends on risk and horizon. Rough compass (not a rule):
| Context | Orientative annual range | Notes |
|---|---|---|
| Savings / cash-like | 1–5% | Lower risk, higher liquidity |
| Broad equity indexes (long history) | ~7–10% | Volatile; past ≠ future |
| Business / marketing | Highly variable | Measure by campaign or cohort, not a generic % |
| Loss | Negative ROI | Useful signal to cut or adjust early |
Basic ROI ignores taxes, fees, inflation, and risk. A 50% gain in one month is not “better” than 50% over five years until you annualize (CAGR) or compare equal periods. This tool is an educational estimate, not financial advice.
FAQ
ROI (%) = ((final value − initial investment) / initial investment) × 100. Example: 15,000 and 10,000 → (5,000 / 10,000) × 100 = 50%.
Total ROI ignores time. CAGR turns the same outcome into a compounded annual rate so different horizons are comparable (defaults: 50% total over 3 years ≈ 14.47% per year).
Yes. Invest $20,000 and finish at $18,000 → ROI −10% and a $2,000 net loss.
Not by default. Subtract costs and taxes from the final value (or add them to cost) before calculating if you want a friction-adjusted ROI.
ROI summarizes a start and an end. Compound interest projects growth with contributions and compounding. Use both: one measures the result, the other simulates the path.
No. Businesses use it on project capital, campaigns, inventory, or equipment. Pair it with profit margin and break-even analysis.
Related calculators
- Compound interest: project growth with contributions
- Simple interest: linear interest without compounding
- Profit margin: margin on price or cost
- Asset depreciation: asset value over time
- Effective annual rate (TEA): compare rates with different compounding