ROI Calculator
Return on investment (ROI) measures the profitability of an investment. Enter your initial investment cost, final value, and holding period. The calculator shows total ROI and annualized ROI, allowing you to compare investment performance over different time periods.
ROI formulas
Total ROI = ((Final Value - Initial Cost) / Initial Cost) × 100%
Annualized ROI = ((Final Value / Initial Cost)^(1 / years) - 1) × 100%
Total ROI shows the simple return. Annualized ROI compounds over years for fair comparison across different time horizons.
How to use this calculator
- Enter the initial investment cost in "Initial investment".
- Enter the current or final value in "Final value".
- Enter the number of years you held the investment in "Years held".
- The calculator shows total and annualized ROI.
Understanding ROI
Total ROI represents the total percentage return over the entire holding period, regardless of time. A 50% total ROI is the same whether it took 1 year or 10 years.
Annualized ROI converts the total return to an annual equivalent. It is useful for comparing investments with different holding periods. Higher annualized ROI indicates better year-by-year performance.
ROI calculator: frequently asked questions
What is ROI?
Return on investment (ROI) is the profit or loss from an investment as a percentage of the initial cost. It shows how much profit you made relative to what you spent.
How is ROI different from interest rate?
Interest is a rate paid by borrowers. ROI is a return earned by investors. ROI accounts for all gains and losses, while interest is usually fixed.
What is annualized ROI?
Annualized ROI adjusts total ROI for time. It shows the equivalent annual return. A 20% gain over 2 years is about 9.55% annualized ROI.
Can ROI be negative?
Yes, if you lose money on an investment, ROI is negative. For example, buying a stock at 100 dollars and selling at 80 dollars gives a -20% ROI.
Should I use ROI or annualized ROI?
Use total ROI for a quick return summary. Use annualized ROI to compare investments with different holding periods fairly.
Official sources
- U.S. Securities and Exchange Commission: Investor Education.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.