There is no universal answer. Acceptable ROI depends on risk, time period, industry, inflation and the alternatives available. A 15% return may be excellent for a low-risk investment and unattractive for a speculative one. Compare against a relevant benchmark, not a universal number.

Yes. If the total returned value is less than the total investment cost, the ROI is negative, which means the investment lost money. A negative ROI is a valid result.

Is ROI the same as annualized return?

No. Simple ROI expresses total return as a percentage of cost without considering time. Annualized return estimates the equivalent yearly rate over the holding period. A 50% ROI over one year and over ten years are very different outcomes, which is why the holding period matters.

Does ROI account for inflation?

No. The figures you enter are nominal. To see real returns, you would need to adjust both the investment cost and the returned value for inflation, or compare the ROI against an inflation benchmark.

Is annualized ROI the same as IRR?

No. The annualized return shown here is a simple geometric annualization that assumes a single initial outflow and a single final value. IRR (internal rate of return) handles multiple irregular cash flows over time and requires a different calculation. Do not treat the annualized figure as IRR.

Should taxes be included?

If you want a net-of-tax figure, include estimated taxes in the additional costs field. Otherwise the result is a pre-tax ROI. Tax treatment varies by jurisdiction and product type, so confirm the rules that apply to you.

ROI Calculator

Return on investment expresses net gain as a percentage of the amount invested, which makes projects of different sizes comparable. Enter the investment amount and the return to see ROI and net gain.

Last reviewed: 2026-07-01

ROI Calculator inputs

Fill in the fields below, then select Calculate. Nothing is submitted automatically.

Initial Investment

Total cost of the investment, including fees and set-up costs.

Final Investment Value

Total value of the investment at the end of the holding period.

Additional Income (optional)

Dividends, interest or other income received during the holding period.

Additional Costs (optional)

Fees, taxes or other costs beyond the initial investment.

Holding Period (optional)

Length of time the investment was held. Used for annualized return.

Holding Period Unit

Choose months or years.

Currency

Changing the currency changes formatting only. It does not convert values between currencies.

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Results

Enter your figures above and select Calculate. Results appear here with clear labels — never colour alone.

What is ROI?

Return on investment expresses the net gain from an investment as a percentage of what that investment cost. Its value lies in comparability: a percentage puts a $2,000 software purchase and a $200,000 equipment purchase on the same scale, which absolute gain figures cannot do.

ROI is used across very different contexts — marketing programmes, capital equipment, training, acquisitions — which is exactly why the inputs need defining carefully. The formula is trivial; deciding what belongs in “cost” and in “return” is the real work.

ROI formula

Total Investment Cost = Initial Investment + Additional Costs
Net Profit = Final Value + Additional Income − Total Investment Cost
Simple ROI (%) = (Net Profit ÷ Total Investment Cost) × 100
Total Returned Value = Final Value + Additional Income

Because the denominator is the total investment cost, understating cost inflates ROI. Include every cost required to obtain the return.

Worked example

An initial investment of $10,000 grows to a final value of $13,000, with $500 in additional income and $250 in additional costs, over a two-year holding period.

Total Investment Cost = 10,000 + 250 = 10,250
Total Returned Value = 13,000 + 500 = 13,500
Net Profit = 13,500 − 10,250 = 3,250
Simple ROI = (3,250 ÷ 10,250) × 100 ≈ 31.71%

For a two-year holding period, the estimated annualized return is:

Annualized = ((13,500 ÷ 10,250) ^ (1 ÷ 2) − 1) × 100
Annualized ≈ 14.77%

This is a simple geometric annualization. It does not equal IRR and does not account for the timing of any intermediate cash flows.

Simple ROI versus annualized return

Simple ROI tells you the total return relative to cost, but it ignores time. A 50% ROI over six months is far stronger than 50% over five years. The estimated annualized return addresses this by converting the total return into an equivalent yearly rate using the formula: ((Total Returned Value ÷ Total Investment Cost) ^ (1 ÷ Years)) − 1) × 100.

Make clear that simple ROI does not account for the timing of multiple cash flows. If you added or withdrew money partway through the holding period, the annualized figure will not reflect that accurately. For irregular cash flows, IRR is the correct tool, not this calculator.

How additional costs affect ROI

Additional costs increase the total investment cost, which reduces ROI. Platform fees, advisory charges, transaction costs and taxes all belong here if you want a realistic figure. Entering them separately lets you see their impact: the same final value with $250 in costs versus $1,000 in costs produces noticeably different ROI percentages.

ROI limitations

Always read ROI with three qualifiers: over what period, at what risk, and compared with what alternative. An investment returning 12% is attractive against a low-yield alternative and unattractive if a comparable option returns 30% at the same risk. A negative result means the money would have been better left uncommitted, at least on the figures used.

The annualized return is an estimate based on a single initial outflow and a single final value. It does not handle intermediate contributions, withdrawals, or varying returns across sub-periods. It also does not account for inflation unless you adjust your inputs for it.

ROI versus profit

ROI and profit measure different things. Profit is an absolute amount — how many dollars were gained. ROI is a ratio — how large that gain is relative to the cost of achieving it. A $10,000 profit on a $50,000 investment (20% ROI) is a better outcome than a $10,000 profit on a $200,000 investment (5% ROI), even though the absolute gain is identical. ROI makes unlike investments comparable; profit tells you the actual money. You need both to judge an outcome properly.

Common mistakes

Using revenue as the return. Revenue is not gain; subtract the cost of what you sold. The profit margin calculator helps you find the profit figure to use.
Omitting hidden costs. Staff time, onboarding and ongoing fees are part of the investment.
Ignoring the period. An ROI without a timeframe cannot be compared.
Over-attributing results. Not every improvement following an investment was caused by it.
Confusing annualized ROI with IRR. They are different calculations for different cash flow patterns.

Frequently asked questions

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Disclaimer

Results from this calculator are estimates for general information only and are not financial, accounting, tax, investment or legal advice. Verify important figures with a qualified professional. Read our full disclaimer.