Return on investment (ROI) calculator
Calculate ROI, net profit and annualised return over any holding period, and compare the result against a benchmark rate you choose.
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- Free, no account
Held for 4 years · 4 years.
Net profit
$7,150.00
Annualised ROI
14.14%
compound annual growth rate
Total in
$10,250.00
investment + costs
Total out
$17,400.00
1.7× your money
Benchmark at 7%
$13,435.66
Versus benchmark
+$3,964.34
- Amount invested54.6%$10,000.00
- Additional costs1.4%$250.00
- Income received4.9%$900.00
- Net profit39.1%$7,150.00
Everything that went in, and everything that came out.
- Your investment (14.14% / yr)$17,400
- Benchmark (7% / yr)$13,436
Formula and working
Net profit
Profit = (final value + income) − (invested + costs) Profit = (16,500 + 900) − (10,000 + 250) = $7,150.00
Return on investment
ROI = profit / total cost × 100 ROI = 7,150 ÷ 10,250 × 100 = 69.756%
Annualised ROI (CAGR)
CAGR = (end / start)^(1/t) − 1 CAGR = (17,400 ÷ 10,250)^(1 ÷ 4) − 1 = 14.145% per year
Benchmark comparison
Benchmark = total cost × (1 + b)^t Benchmark = 10,250 × (1 + 0.07)^4 = $13,435.66
Annualised ROI answers a different question from plain ROI: it is the steady yearly rate that would turn the starting amount into the ending amount over the same period, which is what lets you compare a two-year deal with a ten-year one.
| Year | Your investment | Benchmark | Difference |
|---|---|---|---|
| 1 | $11,699.85 | $10,967.50 | +$732.35 |
| 2 | $13,354.77 | $11,735.23 | +$1,619.55 |
| 3 | $15,243.79 | $12,556.69 | +$2,687.10 |
| 4 | $17,400.00 | $13,435.66 | +$3,964.34 |
Assumptions
- The whole investment is made up front and the whole proceeds are received at the end. Money added or taken out along the way needs an IRR calculation instead.
- Income (dividends, rent, interest) is counted at face value in the year it arrives and is not reinvested.
- Tax on gains and income is excluded — apply your own rate to the net profit.
- Holding periods entered as dates use a 365.2425-day year, which accounts for leap years.
How to use the ROI calculator
- Enter the amount invested and any additional costs — commission, stamp duty, legal fees, renovation, ad spend. Costs belong in the denominator or the ROI flatters itself.
- Enter the final value and any income received along the way, such as dividends, rent or interest.
- Set the holding period, either as a duration or as the actual buy and sell dates.
- Set a benchmark return — what the same money would plausibly have done elsewhere. Beating a benchmark is the real test of an investment, not simply making a profit.
ROI and annualised ROI are different questions
ROI is total gain over total cost:
ROI = (final value + income − invested − costs) / (invested + costs). It says
nothing about how long you waited.
Annualised ROI, the compound annual growth rate, is the constant yearly rate
that would produce the same result: CAGR = (end / start)^(1/t) − 1. This is the
only figure you can compare across investments of different lengths.
| Total ROI | over 1 year | 2 years | 3 years | 5 years | 10 years |
|---|---|---|---|---|---|
| 10% | 10.00% | 4.88% | 3.23% | 1.92% | 0.96% |
| 25% | 25.00% | 11.80% | 7.72% | 4.56% | 2.26% |
| 50% | 50.00% | 22.47% | 14.47% | 8.45% | 4.14% |
| 100% | 100.00% | 41.42% | 25.99% | 14.87% | 7.18% |
| 200% | 200.00% | 73.21% | 44.22% | 24.57% | 11.61% |
A "100% return" sounds identical in every column, yet it is an excellent one-year result and a mediocre ten-year one — 7.18% a year, below the long-run average of a broad equity index. That is why headline ROI figures in marketing material rarely mention the holding period.
Getting the inputs right
- Count every cost. Purchase commission, exchange fees, spread, legal costs, survey fees, renovation, storage, insurance. For a marketing campaign, count agency fees and staff time, not just media spend.
- Count income separately from final value. Rent and dividends are real returns even though they never showed up as a price rise.
- Use the net sale proceeds. Selling costs come out of the final value, not the starting one.
- Be honest about the period. Date mode uses a 365.2425-day year so leap years do not distort short holds.
When ROI is the wrong tool
ROI assumes one amount in at the start and one amount out at the end. If you added or withdrew money during the period — monthly contributions to a fund, staged payments on a property development, a second ad budget halfway through — the timing of those flows changes the true return, and only an internal rate of return (IRR) or money-weighted return handles it correctly. ROI will overstate the result when money went in late and understate it when money came out early.
ROI also ignores risk entirely. A 12% annualised return from a diversified index and a 12% annualised return from a single speculative holding are not the same achievement, and nothing in the arithmetic will tell you that.
Inflation and tax
The figures here are nominal and pre-tax. To get the real return, divide by cumulative inflation over the same period — the inflation calculator will give you the factor. To get the after-tax return, apply your capital gains and dividend or rental income tax rates to the relevant parts of the profit before you compute ROI.
Questions
What is the difference between ROI and annualised ROI?
ROI is the total percentage gain over the whole holding period, however long that was. Annualised ROI (CAGR) is the steady yearly rate that would produce the same result, which is the only fair way to compare a two-year deal with a ten-year one.
What counts as a cost?
Everything you paid out: the purchase itself plus commission, fees, stamp duty, renovation, or campaign spend. Leaving costs out is the most common way an ROI figure ends up flattering.
How do I handle dividends or rent?
Put the total cash received in the income field. It is added to the final value, so it lifts both the net profit and the annualised return.
What if I added money along the way?
ROI assumes a single amount in and a single amount out. If you contributed or withdrew during the period, an internal rate of return (IRR) is the correct measure instead — ROI will overstate or understate depending on the timing.