ROI Calculator
Calculate return on investment, and annualize it over any holding period.
What is it?
This calculator computes Return on Investment (ROI) — how much profit or loss an investment generated relative to its cost — and can annualize that return so investments held for different periods can be fairly compared.
Formula
ROI % = (Final Value − Investment) ÷ Investment × 100
Annualized ROI % = ((Final Value ÷ Investment)^(12/months) − 1) × 100
Formula Explanation
Simple ROI measures total return over the entire holding period without regard to how long that period was. Annualized ROI converts that total return into an equivalent yearly rate, which is essential for comparing two investments held for different lengths of time — a 20% return over 6 months is far better than a 20% return over 3 years.
Example Calculation
A $100,000 investment that grows to $135,000 over 18 months has a simple ROI of 35%, but an annualized ROI of about 21.6% per year once the holding period is factored in.
How to Use
- Enter the amount originally invested.
- Enter the final value or total return received.
- Optionally enter the holding period in months to see the annualized rate.
- Compare simple ROI and annualized ROI side by side.
Benefits
- Calculates both simple and annualized ROI in one step.
- Makes it possible to fairly compare investments or projects with different time horizons.
- Works for any kind of investment — business projects, marketing spend, stocks, or real estate.
Use Cases
- Comparing the return on a marketing campaign against other business investments.
- Evaluating whether a business project or capital expenditure was worthwhile.
- Comparing investment returns across assets held for different lengths of time.
What Your Result Means
A positive ROI means the investment gained value; a negative ROI means it lost value. The annualized figure is the more useful number for comparison purposes, since it normalizes for time — always compare annualized ROI, not simple ROI, when holding periods differ.
Tips
- Always compare annualized ROI, not simple ROI, when evaluating investments or projects with different durations.
- Include all costs (fees, taxes, maintenance) in the initial investment figure for an accurate ROI.
- A very high simple ROI over a very short period can produce a misleadingly extreme annualized figure — sanity-check short holding periods.
Common Mistakes
- Comparing simple ROI across investments held for different time periods without annualizing first.
- Leaving out fees, taxes, or other costs from the investment amount, which overstates the true return.
- Treating a negative ROI over a very short period as equally bad as the same ROI over years — always check the annualized figure.
FAQs
What's a good ROI?
It depends heavily on the type of investment and risk involved — there's no universal benchmark, though many businesses target double-digit annualized returns for higher-risk projects and lower returns for safer ones.
Why does annualized ROI matter if I already have simple ROI?
Simple ROI alone can't tell you whether a return was earned quickly or slowly — annualizing it lets you fairly compare investments held for different lengths of time.
Can ROI be negative?
Yes, a negative ROI means the final value was less than the amount invested, indicating a loss.
This is a straightforward ROI calculation and does not account for taxes, inflation, or the time value of money beyond simple annualization.
Last updated: July 26, 2026