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📊 Investment Details
Enter your investment cost and return to calculate ROI
Initial Investment Cost $10,000
$100$1,000,000
Final Value / Return $15,000
$0$2,000,000
Investment Duration 2 years
1 yr30 yrs
$
$
📈 Your ROI Results
Return on Investment
50%
✅ Profitable Investment
💵 Total Investment Cost$10,000
💰 Final Value$15,000
📈 Net Profit$5,000
🎯 ROI Percentage50%
📅 Annualized ROI22.5%/yr
⏱️ Investment Duration2 years
💸 Cost Multiplier1.5x
📊 Profit Margin33.3%
⚖️ Compare Multiple Investments
Investment Name
Cost ($)
Return ($)
ROI
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What is ROI (Return on Investment)?
Return on Investment — commonly known as ROI — is a performance metric used to evaluate the efficiency and profitability of an investment. It measures the return relative to the cost of the investment, expressed as a percentage. ROI is one of the most widely used financial metrics in business, investing and marketing because of its simplicity and versatility.
A positive ROI means your investment generated profit. A negative ROI means you lost money. The higher the ROI percentage, the more profitable the investment relative to its cost.
ROI Formula:
ROI = ((Final Value - Initial Cost) / Initial Cost) × 100
Net Profit = Final Value - Initial Cost
Annualized ROI = ((1 + ROI/100)^(1/years) - 1) × 100
Examples:
Invest $10,000, receive $15,000 back:
ROI = ((15,000 - 10,000) / 10,000) × 100 = 50%
Annualized over 2 years:
Annual ROI = ((1.50)^(0.5) - 1) × 100 = 22.5% per year
What is a Good ROI?
- Stock market — historically averages 7-10% annualized ROI
- Real estate — typically 8-12% annual ROI including appreciation and rental income
- Business investments — a good ROI is generally 15-30% or higher
- Marketing campaigns — ROI of 5:1 ($5 returned per $1 spent) is considered good
- Any investment — ROI above your cost of capital or inflation rate is positive
ROI vs Other Investment Metrics
- ROI measures total return regardless of time period
- Annualized ROI normalizes returns for fair time-based comparison
- IRR (Internal Rate of Return) accounts for cash flow timing
- NPV (Net Present Value) accounts for the time value of money
- For simple investment comparisons ROI is the most practical and widely understood metric
How to Use ROI to Make Better Investment Decisions
- Always compare annualized ROI — not total ROI — when comparing investments of different durations
- Account for all costs including taxes, fees and maintenance
- Compare against alternative uses of capital — like putting money in an index fund
- Consider risk — a higher ROI investment may carry significantly more risk
- Use our comparison tool above to evaluate multiple investments side by side
Frequently Asked Questions
How do I calculate ROI? +
ROI = ((Final Value - Initial Cost) / Initial Cost) × 100. For example, if you invested $5,000 and received $7,500 back: ROI = ((7,500 - 5,000) / 5,000) × 100 = 50%. This means you earned a 50% return on your investment. Use our calculator above for instant results.
What is a good ROI percentage? +
A good ROI depends on the type of investment and the time period. For stock market investments, 7-10% annualized is considered good historically. For business investments, 15-30% or higher is typically sought. For real estate, 8-12% annualized is common. Any ROI that exceeds your cost of capital and inflation rate is generally considered positive.
What is annualized ROI and why does it matter? +
Annualized ROI converts total ROI into an equivalent annual rate, allowing fair comparison between investments of different durations. For example, a 50% ROI over 2 years is not the same as a 50% ROI over 5 years. Annualized ROI for 50% over 2 years = 22.5% per year. For 50% over 5 years = 8.5% per year. Always compare annualized ROI for fair investment comparisons.
Can ROI be negative? +
Yes. A negative ROI means you lost money on your investment — the final value was less than what you invested. For example, if you invested $10,000 and only received $7,000 back: ROI = ((7,000 - 10,000) / 10,000) × 100 = -30%. Negative ROI is common in high-risk investments, failed business ventures or declining markets.
How is ROI used in marketing? +
Marketing ROI measures the revenue generated by a marketing campaign relative to its cost. Marketing ROI = ((Revenue from Campaign - Marketing Cost) / Marketing Cost) × 100. An ROI of 500% means you earned $5 in revenue for every $1 spent on marketing. A ratio of 5:1 or higher is generally considered a good marketing ROI.