In plain words: type what you paid and what the investment is worth now. The calculator shows how much you gained or lost as a percentage of what you paid. Add the number of years to see the yearly equivalent.
Last updated by Hira Science Academy. Educational tool; see the limitations section below.
What this ROI calculator does
This ROI calculator measures how much an investment returned compared with what it cost. Enter the initial cost and the final value to get the return on investment as a percentage, together with the net gain or loss. You can also enter income received along the way (such as dividends or rent) and the holding period, which unlocks the annualized ROI: the equivalent steady yearly return. Use it for shares, property, a business purchase, equipment or a marketing campaign. For growth at a constant rate, use the compound interest calculator. For regular contributions, use the savings calculator. To see the cost of financing an investment, try the loan repayment calculator.
How to use the ROI calculator
- Enter the initial investment cost, including any fees you paid when you bought.
- Enter the final value or proceeds, after selling costs if you have sold.
- Optional: enter additional income received while holding, such as dividends or rent.
- Optional: choose how to give the holding period. Use Length takes a number of years. Use Dates takes a start date and an end date and counts the days between them. Either one unlocks the annualized ROI.
- Press Calculate. A positive ROI is a gain and a negative ROI is a loss.
The ROI formulas
What each symbol means
- \(C\) — initial cost
- Everything you paid to acquire the investment, including fees.
- \(V\) — final value or proceeds
- What you can sell it for or what you received, after selling costs.
- \(I\) — additional income
- Dividends, rent or interest received while you held it. Zero if none.
- \(y\) — holding period in years
- The time between buying and the final value. Used only for annualized ROI. With dates, \(y = \text{days} / 365\).
Worked examples
Example 1: a simple gain
- You invest $5,000 and later it is worth $6,500.
- Net gain: \(6{,}500 - 5{,}000 = 1{,}500\).
- ROI: \(1{,}500 / 5{,}000 \times 100 = \) 30.00%.
Example 2: a loss, and what it takes to recover
- You invest $8,000 and it falls to $6,800. Net loss: \(6{,}800 - 8{,}000 = -1{,}200\).
- ROI: \(-1{,}200 / 8{,}000 \times 100 = \) -15.00%.
- To get back to $8,000 the $6,800 must grow by \(8{,}000 / 6{,}800 - 1 = \) 17.65%, which is more than the 15% that was lost.
Example 3: annualizing a three-year return
- $5,000 becomes $6,500 over 3 years. The multiple is \(6{,}500 / 5{,}000 = 1.3000\).
- Take the cube root: \(1.3000^{1/3} = 1.0914\).
- Annualized ROI: \(1.0914 - 1 = \) 9.14% a year, compared with a total ROI of 30%.
Example 4: using dates instead of a length of time
- You buy on 15 March 2022 for $10,000 and sell on 20 September 2025 for $13,000. Choose Use Dates.
- Days between the dates: 1,285. Years: \(1,285 / 365 = 3.5205\).
- Multiple: \(13{,}000 / 10{,}000 = 1.3\). Root: \(1.3^{1/3.5205} = 1.0774\).
- ROI: 30.00%. Annualized ROI: 7.74% a year. Dates are more exact than rounding to "about 3.5 years".
Example 5: a property with buying and selling costs
- Buy for $200,000 and pay $12,000 in fees and costs. Total cost: $212,000.
- Later sell for $250,000 and pay $15,000 in selling costs. Net proceeds: $235,000.
- Net gain: $23,000. ROI: 10.85%, not the 25.00% you would get by ignoring costs.
- Enter the total cost and the net proceeds to get the realistic figure.
Example 6: dividends included
- You buy shares for $4,000. They are worth $4,200 and paid $150 in dividends.
- Total return: \(4{,}200 + 150 - 4{,}000 = \) $350.
- ROI: \(350 / 4{,}000 \times 100 = \) 8.75%. Enter 150 in the additional income box to include it.
Use Length or Use Dates?
- Use Length
- Best when you already know the time in years, such as "three years" or "18 months" (1.5). It is quick and works for plans and what-ifs.
- Use Dates
- Best for a real purchase and sale. You enter the start and end dates and the calculator counts the exact days, so part-years are handled for you. A future end date lets you test a target sale date.
- How days become years
- Days between the dates divided by 365. A leap day therefore adds a fraction of a day to the year count, which has a negligible effect on the result.
- Very short periods
- Annualizing a few weeks or months multiplies a small return into a large yearly figure. Treat that number as an extrapolation, not a promise.
Why annualized ROI matters
A total ROI hides time. A 30% return sounds the same whether it took one year or ten, but the yearly performance is very different. The table holds the total ROI at 30% and changes only the holding period.
| Holding period | Total ROI | Annualized ROI |
|---|---|---|
| 1 year | 30.00% | 30.00% |
| 2 years | 30.00% | 14.02% |
| 3 years | 30.00% | 9.14% |
| 5 years | 30.00% | 5.39% |
| 10 years | 30.00% | 2.66% |
Annualized ROI assumes growth at a steady rate over the holding period.
ROI and related measures
- ROI
- Net gain divided by cost. Simple and widely used, but ignores time and risk.
- Annualized ROI
- The steady yearly return that would produce the same total. Use it to compare investments held for different periods.
- Net profit
- The money gained or lost, not a percentage. Compare it with ROI to judge size and efficiency.
- IRR (internal rate of return)
- A time-weighted measure for investments with several cash flows at different dates. Not calculated here; use it when money goes in and out repeatedly.
- Risk
- ROI does not show how uncertain the result was. Two investments with the same ROI can carry very different risk.
Where ROI is used
- Shares and funds. Compare what you paid with value plus dividends.
- Property. Include purchase fees, renovation, maintenance and selling costs for a realistic figure.
- Business. Judge whether equipment, hiring or a new product returned more than it cost.
- Marketing. Compare revenue attributed to a campaign with what was spent on it.
- Education and skills. Compare the cost of a course with the extra income it leads to, remembering that benefits may be uncertain.
Common mistakes to avoid
- Ignoring fees and taxes. Include costs to buy and sell, and consider tax separately.
- Comparing ROI across different time periods. Use annualized ROI instead.
- Leaving out income. Dividends or rent can change the result noticeably.
- Starting from the wrong cost. Use everything you paid in, not only the price.
- Treating past ROI as a forecast. Past returns do not guarantee future results.
- Mixing up percentage change and percentage points. Moving from 10% to 15% ROI is a 5-point rise, which is a 50% relative increase. Check the arithmetic with the percentage calculator.
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Assumptions and limitations
- Simple ROI ignores time unless you enter a holding period. Use annualized ROI to compare different durations.
- Single cash-in, single cash-out. Several deposits and withdrawals need an IRR calculation, which is not provided here.
- No tax, inflation or risk adjustment. Include costs in the cost and proceeds and consider tax separately.
- Annualized ROI assumes a steady rate over the holding period, which real investments rarely follow.
- Privacy. The maths runs in your browser. The numbers you type are not sent to a Hira Academy calculation server. Like the rest of the site, the page loads Google Analytics and advertising scripts; see the Privacy Policy.
Frequently asked questions about the ROI Calculator
What is ROI?
Return on investment (ROI) measures the gain or loss on an investment relative to its cost. It is usually shown as a percentage: ROI = (final value − initial cost) ÷ initial cost × 100.
How do you calculate ROI?
Subtract the initial cost from the final value to get the net gain, divide by the initial cost and multiply by 100. For example, an investment that grows from $5,000 to $6,500 has an ROI of 30%.
What is a good ROI?
There is no single good ROI. It depends on risk, time, and what alternatives were available. A return that looks high over ten years may be modest per year. Compare investments using annualized ROI and consider the risk taken.
What is the difference between ROI and annualized ROI?
ROI is the total return over the whole holding period. Annualized ROI converts it to a steady yearly rate so investments of different lengths can be compared. $5,000 growing to $6,500 in 3 years is a 30% ROI but about 9.14% annualized.
Should I use dates or a length of time for the holding period?
Use Length when you know the period in years, for example 3 or 1.5. Use Dates when you have the actual purchase and sale dates: the calculator counts the exact days and converts them to years. Both give the same annualized ROI for the same period.
How does the calculator turn dates into years?
It counts the days between the start and end dates and divides by 365. For example, 15 March 2022 to 20 September 2025 is 1,285 days, or about 3.52 years, which gives an annualized ROI of about 7.74% on a total ROI of 30%.
Can ROI be negative?
Yes. A negative ROI means the investment lost money. An investment that falls from $8,000 to $6,800 has an ROI of −15%.
Why does a loss need a bigger gain to recover?
A percentage gain is applied to a smaller base after a loss. After a 15% fall from $8,000 to $6,800 you need about 17.65% growth to get back to $8,000.
Should I include fees and taxes in ROI?
Include buying and selling costs in the cost and proceeds for a realistic figure. Tax depends on your country and circumstances, so consider it separately or ask a qualified adviser.
How do dividends or rent affect ROI?
Income received while you held the investment adds to the return. Enter it in the additional income box and the calculator adds it to the final value.
Does ROI account for risk?
No. ROI shows what happened, not how uncertain it was. Compare ROI with the risk and the time involved before drawing conclusions.
What is the difference between ROI and IRR?
ROI is a simple ratio of gain to cost. IRR accounts for the timing of several cash flows. Use IRR when money goes in and out at different times. This calculator does not compute IRR.
Are the results guaranteed?
No. They are arithmetic on the numbers you enter. Past returns do not predict future returns.
Is my data stored or sent anywhere?
No. The calculation runs in your browser and the values you type are not sent to a Hira Academy calculation server.
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