How ROI is calculated
Return on investment is the standard measure of profitability relative to what was spent: net profit divided by the original cost.
- Cost — the amount originally invested
- Final value — what the investment is worth now
More detail
ROI ignores time
A 30% ROI over one month and a 30% ROI over ten years are very different outcomes, but the raw ROI percentage doesn't distinguish them. Comparing investments held for different periods usually calls for an annualized return instead.
Quick check. ROI is 0% when the final value equals the cost (no gain, no loss), and negative when the final value is lower than the cost — a useful sign check on any result this calculator gives you.
Frequently asked questions
What counts as a "good" ROI?
It depends entirely on the time period and the risk taken — a 20% ROI is excellent over one month but mediocre over ten years. Because this calculator's ROI has no built-in time frame, always compare it against investments held over roughly the same period, or convert to an annualized rate (see the CAGR calculator) for a fair comparison.
Should investment costs like fees or taxes be included?
Yes, for an accurate figure — add any purchase fees, commissions, or costs directly into "Investment cost," and subtract selling fees or taxes from "Final value" before entering it. Leaving them out overstates the real ROI.
How is ROI different from CAGR?
ROI (Final value − Cost) ÷ Cost measures total gain relative to cost with no regard for how long it took. CAGR instead spreads that same gain evenly across each year, so it's the better tool for comparing investments held for different lengths of time.