Return on Investment (ROI) is the most universal metric for measuring the profitability of an investment. It works for stocks, real estate, and business investments. Our calculator also computes the annualized ROI (CAGR), telling you exactly how much your money grew per year.
Return on Investment (ROI) Calculator
Whether you're buying stocks, flipping real estate, or launching a new business, knowing your true ROI is essential. Our calculator tells you exactly how much your money grew, both in total percentage and annualized terms.
What is Return on Investment (ROI)?
Return on Investment (ROI) is a universally used financial metric to evaluate the profitability of an investment. It simply measures the gain or loss generated on an investment relative to the amount of money invested.
The ROI Formula
ROI = (Final Value - Initial Investment) / Initial Investment × 100
Why Annualized ROI (CAGR) Matters More
If you make a 50% ROI, is that good? It depends! If you made 50% in one year, that's incredible. If it took you 15 years to make 50%, that's terrible (less than 3% per year).
This is why Annualized ROI (also known as Compound Annual Growth Rate or CAGR) is so important. It normalizes your return to a yearly basis, allowing you to accurately compare a 3-month stock trade against a 5-year real estate investment.
Example ROI Calculation
Let's say you invest $10,000 in a startup. Three years later, you sell your shares for $15,000.
- Total Profit: $15,000 - $10,000 = $5,000
- Total ROI: ($5,000 / $10,000) × 100 = 50%
- Annualized ROI (CAGR): It grew at roughly 14.47% per year for 3 years.