ROI Calculator: Measure Investment Performance Accurately
Our ROI Calculator computes simple ROI, annualized returns, and inflation-adjusted real ROI. Compare investments fairly.
What is ROI?
Return on Investment = (Gain - Cost) / Cost. Measures profitability percentage.
ROI vs Annualized ROI
| Factor | Simple ROI | Annualized ROI |
|---|---|---|
| Time Period | Total | Per year |
| Used for | Quick calc | Compare over time |
| Formula | (Net / Cost) × 100 | ((1 + ROI)^(1/years) - 1) × 100 |
Factors in ROI
- Initial investment
- Final value / returns
- Additional costs
- Inflation adjustment
- Holding period
Example: $10K Invested, $15K Returned, 5 Years, $500 Fees
- Net Profit: $4,500
- ROI: 42.86%
- Annualized: 7.39%
- Real ROI (3% inflation): 4.24%
How ROI is Calculated
Simple: (Final - Initial - Costs) / (Initial + Costs)
Annualized: ((Final / Net Cost) ^ (1/years)) - 1
Why ROI Matters
- Evaluate performance
- Compare assets
- Account for time & costs
- Inflation erodes returns
Pro Tips
Limitations
- Ignores risk
- No cash flow timing
- Assumes reinvestment
Conclusion
Track profitability with our ROI Calculator. Explore more in Finance Calculators.