How do I calculate ROI?
- 1Enter the amount you invested, and either what you got back, your profit or your loss.
- 2Add how long you held it — in years, months or days — for the yearly return.
- 3To compare, switch on the second investment and enter its numbers.
- 4Read the ROI, the profit and the annualised ROI (CAGR) for each.
What is the ROI formula?
- 01Profit = amount returned − amount invested
- 02ROI = profit ÷ amount invested × 100
- 03Annualised ROI (CAGR) = (amount returned ÷ amount invested)^(1 ÷ years) − 1
- 04Months ÷ 12 or days ÷ 365 give the years
Return on investment (ROI) compares what you gained with what you put in. Put in 10,000 and get back 15,000: the profit is 5,000 and the ROI is 50%.
ROI alone ignores time. 50% in 3 years is much better than 50% in 10 years. The annualised ROI — also called the compound annual growth rate (CAGR) — is the steady yearly growth that turns 10,000 into 15,000 in 3 years: 14.47% a year.
To compare investments, use the yearly figure. 30% in 2 years (14.02% a year) is a little weaker than 50% in 3 years (14.47% a year), even though both look good.
This is a profit-based measure for any investment — a business, shares, property, gold, a shop. It works the same in any currency.
What is the ROI if 10,000 grows to 15,000 in 3 years?
You invest 10,000 and get back 15,000 after 3 years.
Profit is 5,000, so the ROI is 50% — an annualised return (CAGR) of 14.47% a year.
Turn on the comparison to set it against a second investment — for example 30% in 2 years, which is 14.02% a year and so a little weaker.
Good to know
- Always compare investments by their yearly return (CAGR), not by the total ROI.
- Include every cost: buying and selling fees, commissions, repairs, taxes. A forgotten cost makes ROI look better than it is.
- Compare your yearly return with inflation — a 6% return with 8% inflation is a real loss.
- A high ROI often comes with high risk. Look at what could go wrong, not just what went right.
Return on investment questions
How do you calculate ROI?
ROI = (amount returned − amount invested) ÷ amount invested × 100. Invest 20,000 and get back 25,000: (25,000 − 20,000) ÷ 20,000 = 25%.
What is the difference between ROI and annualised ROI?
ROI is the total return over the whole time. Annualised ROI (CAGR) spreads it into a steady yearly rate: (returned ÷ invested)^(1 ÷ years) − 1. Use the annual figure to compare investments held for different lengths of time.
What is a good ROI?
It depends on the risk and the time. Many people compare with a broad stock market index fund over the long run, or at least with inflation: a return below inflation means your money buys less than before.
Can ROI be negative?
Yes. If you get back less than you put in, the profit is negative and so is the ROI. Invest 10,000 and get back 8,000: the ROI is −20%.
How do I calculate ROI for months or days?
Enter the time in months or days. The calculator turns it into years (months ÷ 12, days ÷ 365) for the yearly figure. Be careful with very short periods — annualising a quick gain can show an unrealistically high yearly return.
Sources
- U.S. SEC Investor.gov – Glossary: annual return
- CFA Institute – Time value of money and holding-period return (standard formulas)
Formulas last reviewed: September 30, 2026 ·How we check our formulas