# ROI Calculator

> Return on investment (ROI) is your gain divided by what you put in. Investing $10,000 and getting back $15,000 is a 50% ROI; if that took 3 years, the annualized ROI is 14.47% a year. Enter your own amounts and dates to compare investments fairly.

- Interactive calculator: https://calculatorswithsteps.com/roi-calculator
- Category: Financial Calculators
- Last updated: 2026-11-10
- Publisher: Calculators With Steps (calculatorswithsteps.com)

## How to use the ROI calculator

1. **Amount invested** – everything you paid, including commissions, fees and closing costs.
2. **Amount returned** – what you received at the end: sale proceeds or current value, plus any dividends, interest or rent you collected.
3. **Investment length** – enter the number of years, pick start and end dates, or skip it if you only want the total ROI.

You get the ROI percentage, the net gain or loss, the investment multiple and, when you give a time period, the annualized ROI. A table shows how the same total return looks when it is spread over different lengths of time.

## The ROI formula

**ROI = (Amount returned − Amount invested) ÷ Amount invested × 100**

**Annualized ROI = (Amount returned ÷ Amount invested)^(1/t) − 1**

- **t** = years held. With dates, t = days ÷ 365.

The investment multiple (amount returned ÷ amount invested) is another way to state the same result. A multiple of 1.5× means you got back $1.50 for every dollar invested.

## Worked example

You invest $10,000 and three years later the investment is worth $15,000:

| Step | Calculation | Result |
| --- | --- | --- |
| Net gain | $15,000 − $10,000 | $5,000 |
| ROI | $5,000 ÷ $10,000 × 100 | 50% |
| Annualized ROI | 1.5^(1/3) − 1 | 14.47% a year |
| Simple average | 50% ÷ 3 | 16.67% a year |

**Using dates.** Suppose you invested $4,000 on January 15, 2024 and cashed out $5,200 on July 15, 2026. That is 912 days, or about 2.5 years. ROI is 30% and the annualized ROI is 11.07% a year.

## Why time matters when comparing ROI

ROI on its own says nothing about how long the money was tied up. The same 50% return means very different things:

| Held for | Annualized ROI |
| --- | --- |
| 1 year | 50% |
| 2 years | 22.47% |
| 3 years | 14.47% |
| 5 years | 8.45% |
| 10 years | 4.14% |

Compare two investments: A turns $10,000 into $14,000 in 2 years (40% ROI), and B turns $10,000 into $16,000 in 4 years (60% ROI). B has the higher ROI, but A grew faster: 18.32% a year against 12.47%. If you could reinvest A's proceeds at a similar rate, A is the better result.

## ROI on a rental property

Real estate ROI follows the same formula, but it is easy to leave costs out. Count all the cash you put in: down payment, closing costs and initial repairs. Count everything you got back: net rent after mortgage payments, taxes, insurance and maintenance, plus the sale proceeds after paying off the loan and selling costs.

Suppose you put $60,000 into a rental, collect $18,000 of net rent over 5 years and walk away from the sale with $75,000. You got back $93,000, so ROI is ($93,000 − $60,000) ÷ $60,000 = 55%, or 9.16% a year annualized. Enter $60,000 and $93,000 with a 5-year length to check it.

## Limitations of ROI

- **It ignores timing within the period.** If you added or withdrew money along the way, simple ROI can mislead. An internal rate of return (IRR) or the [CAGR calculator](https://calculatorswithsteps.com/cagr-calculator) with time-weighted values is more accurate for those cases.
- **It ignores risk.** A 12% return from a volatile investment is not the same as 12% from an insured deposit.
- **Costs are easy to miss.** Leave out fees, taxes, maintenance or interest on borrowed money and the ROI looks better than it was.
- **Definitions vary.** In business, ROI may use profit after operating costs; in real estate, investors often use cash-on-cash return. Be clear about what goes in each number.

To project what an investment could grow to, use the [investment calculator](https://calculatorswithsteps.com/investment-calculator). For the growth of a deposit at a fixed rate, see the [compound interest calculator](https://calculatorswithsteps.com/compound-interest-calculator). For markup and margin on a sale, the [profit margin calculator](https://calculatorswithsteps.com/profit-margin-calculator) is the better fit.

## Frequently asked questions

### What is the ROI formula?

ROI = (amount returned − amount invested) ÷ amount invested × 100. If you invest $10,000 and get back $15,000, ROI = 5,000 ÷ 10,000 × 100 = 50%.

### How do I calculate annualized ROI?

Annualized ROI = (amount returned ÷ amount invested)^(1 ÷ years) − 1. A 50% gain over 3 years is 1.5^(1/3) − 1 = 14.47% a year. Over 1.5 years the same gain would be 31.04% a year.

### Why is annualized ROI lower than ROI divided by years?

Dividing by the number of years ignores compounding. A 50% return over 3 years averages 16.67% a year by simple division, but growing at 14.47% a year compounds to the same 50%. The annualized figure is the one to compare with savings rates or market returns.

### How do I calculate ROI in Excel?

With the amount invested in A2 and the amount returned in B2, use =(B2-A2)/A2 and format it as a percentage. For annualized ROI over the years in C2, use =(B2/A2)^(1/C2)-1.

### Can ROI be negative?

Yes. If $10,000 falls to $8,000, ROI is −20%. Over 3 years that is an annualized loss of 7.17% a year. A total loss is −100%.

### What is the difference between ROI and CAGR?

ROI is the total return over the whole holding period. CAGR (compound annual growth rate) is the same return expressed per year, which is what this calculator calls annualized ROI. Use the CAGR calculator when you have a beginning and ending value and want the yearly growth rate.

### How do I calculate ROI on a rental property?

Count everything you put in, including the down payment, closing costs and repairs, and everything you got back: sale proceeds after paying off the mortgage, plus net rental income after expenses. ROI is the difference divided by your total cash invested.

## Sources

- [Wikipedia – Return on investment](https://en.wikipedia.org/wiki/Return_on_investment)
- [Wikipedia – Rate of return (annualized returns)](https://en.wikipedia.org/wiki/Rate_of_return)

> Disclaimer: results are estimates for information and education, not financial advice. Confirm important decisions with a qualified professional.