ROI Calculator: Return on Investment, Net Gain and Annualised ROI
An ROI calculator measures the gain or loss relative to the amount invested. It can compare projects or investments with similar risk and timing, while annualized return helps compare holding periods of different lengths.
Quick answer
ROI equals net gain divided by total invested cost. A positive percentage means the ending value and income exceeded the cost, but it does not measure risk, taxes, inflation, or the path of returns.
At a glance
- What it calculates
- Calculate return on investment, net gain, and annualized return from an initial cost and ending value.
- Who it is for
- US business owners, marketers and investors measuring a completed or projected investment.
- Coverage
- United States (federal rules; state and local rules vary)
- Data and assumptions
- A single cash outflow at the start and a single value at the end; no interim cash flows, financing costs or taxes.
- Cost
- Free, no signup, calculations run in your browser
- Last reviewed
- 2026-07-09
Calculator
How to use this calculator
- Enter the initial and additional costs.
- Enter the ending value and cash income received.
- Enter the holding period for annualized return.
- Compare ROI with risk, liquidity, taxes, and alternatives.
Explanation
What it is
An ROI calculator measures the gain or loss relative to the amount invested. It can compare projects or investments with similar risk and timing, while annualized return helps compare holding periods of different lengths.
How it works
The calculator adds initial and additional costs, subtracts that total from ending value plus cash income, and divides the gain by cost. Annualized return converts the total growth into an equivalent compound yearly rate.
When to use it
Use it to compare a completed or proposed investment against alternatives on the same percentage basis.
Limitations
- ROI assumes a single outflow and a single ending value.
- Interim income, drawdowns and reinvestment are not modelled; use IRR for those.
- Risk, volatility and liquidity are not reflected in the percentage.
Key terms
- ROI
- Net gain or loss divided by invested cost.
- Cost basis
- The amount invested, adjusted for included costs.
- Annualized return
- A compound annual rate equivalent to the total holding-period return.
- Value multiple
- Ending value plus income divided by total invested cost.
Formula
The calculator adds initial and additional costs, subtracts that total from ending value plus cash income, and divides the gain by cost. Annualized return converts the total growth into an equivalent compound yearly rate.
Worked example
An investment costing $10,500 in total that ends at $12,500 and paid $600 has a $2,600 gain and an ROI of about 24.76%.
FAQ
What is a good ROI?
There is no universal good ROI. Compare returns with the investment’s risk, time horizon, liquidity, taxes, inflation, and a relevant benchmark.
What is the difference between ROI and annualized return?
ROI measures the total gain over the entire period, while annualized return expresses growth as an equivalent yearly compound rate.
Can ROI be negative?
Yes. ROI is negative when ending value plus income is less than total invested cost.
Does ROI include dividends or rental income?
It can if you enter that cash in the income field. Keep your treatment of reinvested income and fees consistent.
Why can a high ROI still be a bad investment?
ROI alone can ignore risk, time, leverage, taxes, concentration, volatility, and whether the result is repeatable.
How do I calculate ROI as a percentage?
ROI = (final value − initial cost) ÷ initial cost × 100. A $2,000 investment worth $2,600 has an ROI of 30%. Include every cost in the initial figure so the percentage is not overstated.
Common mistakes
- Comparing a three-year ROI with a one-year ROI without annualising.
- Leaving transaction costs, taxes and fees out of the initial cost.
- Ignoring interim cash flows, which ROI cannot capture.
- Treating a projected ROI as a realised return.
Tips
- Include every cost in the initial figure, including fees and setup time you paid for.
- Use annualised ROI when comparing investments held for different lengths of time.
- Compare against a benchmark rather than judging the percentage on its own.
- Keep the measurement window consistent across the options you compare.
Sources and editorial review
Educational estimates only; not personalized financial, tax, legal, lending, investment, or insurance advice.