ROI Calculator
Calculate how much your investments earned with our ROI formula and see exactly where your money went.
How ROI Calculator Works
Return on Investment (ROI) is one of the most straightforward ways to measure how well your investments are performing. It compares what you originally invested against what you've gotten back, giving you a clear picture of your gains or losses.
The calculator works by taking your initial investment amount and final value, then determining both your total return and annualized return. The total ROI shows your overall performance, while the annualized ROI breaks it down to an annual rate - making it easier to compare investments held for different time periods.
You'll get three key results: your total ROI percentage, your annualized ROI (which accounts for time), and your actual dollar profit or loss. This helps you understand not just whether you made money, but how efficiently your money worked over time.
ROI Calculator Formula Breakdown
Formula
Total ROI = ((Final Value - Initial Investment) ÷ Initial Investment) × 100
Annualized ROI = ((Final Value ÷ Initial Investment) ^ (1 ÷ (Investment Period in months ÷ 12)) - 1) × 100
Investment Gain = Final Value - Initial InvestmentVariables Explained
- Initial InvestmentThe total amount you originally invested, including the purchase price plus any fees, commissions, or transaction costs. This should represent your true out-of-pocket cost at the beginning of the investment.
- Return / Final ValueThe current or final value of your investment, including the asset's value plus any dividends, interest, or other income received. If you've already sold, this would be your total proceeds after fees.
- Investment PeriodThe total time you held or plan to hold the investment, measured in months. This is crucial for calculating your annualized return, which shows how your investment performed on a yearly basis.
Example Calculation
Given:
- Initial Investment: $20,000
- Return / Final Value: $24,000
- Investment Period: 24 months
Calculation:
Total ROI = (($24,000 - $20,000) ÷ $20,000) × 100 = 20.00%
Annualized ROI = (($24,000 ÷ $20,000) ^ (1 ÷ (24 ÷ 12)) - 1) × 100 = 9.54%
Investment Gain = $24,000 - $20,000 = $4,000Result:
20.00% total ROI, 9.54% annualized ROI, $4,000 profitExplanation
You invested $20,000 in a stock or fund that grew to $24,000 over 2 years. While your total return was 20%, your annualized return of 9.54% shows how this performs compared to other investments on a yearly basis.
Tips for Using ROI Calculator
- 💡Include all costs in your initial investment amount - fees, commissions, and taxes can significantly impact your true ROI.
- 💡Use annualized ROI when comparing investments held for different time periods, as it gives you a more accurate picture of performance.
- 💡Remember that ROI doesn't account for risk - a 15% return on a volatile stock isn't the same as 15% from a stable bond.
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