Plot No. 23 · Money & Finance
ROI Calculator
Work out the return on investment from the amount you put in and what it is worth now. ROI percent is the final value minus the amount invested, divided by the amount invested, times 100. It also shows your net profit and the annualised ROI, which spreads that return evenly across the holding period.
ROI is a gross figure and ignores fees and tax. Annualised ROI needs a holding period above zero and a positive final value, otherwise it is shown as not available.
The link saves your inputs so you can bookmark or share this exact result.
How return on investment is worked out
Return on investment measures how much an investment gained relative to what you put in. The calculator subtracts the amount invested from the final value to get net profit, divides that by the amount invested and multiplies by 100 to give the ROI percentage. A positive figure is a gain and a negative figure is a loss.
Total ROI ignores how long you held the investment, which makes a fast gain and a slow one look identical. To fix that the calculator also gives annualised ROI, the steady compound rate that would turn your starting amount into the final value over the years held. It uses final divided by invested, raised to the power of one over the years, minus one, and only shows when both the years and the final value are positive.
How to use the ROI calculator
- Enter the total amount you invested, including any buying costs.
- Enter what the investment is worth now, or what you sold it for.
- Enter the holding period in years, then read the ROI, net profit and annualised ROI.
Worked examples
A three-year hold
Inputs: 10,000 invested, 13,000 final value, 3 years
Result: Net profit is 3,000 and total ROI is 30%, but the annualised ROI is about 9.14% a year because the return compounds rather than adding up evenly.
A loss
Inputs: 10,000 invested, 8,000 final value, 2 years
Result: Net profit is minus 2,000 and ROI is minus 20%, with an annualised ROI of about minus 10.6% a year.
Limitations and common mistakes
Edge cases and limitations
- ROI is a gross figure that ignores fees, commissions and tax unless you fold them into the inputs yourself.
- Annualised ROI needs a holding period above zero and a positive final value, otherwise it is shown as not available.
- It does not account for any income such as dividends or interest taken out along the way, only the start and end values.
Common mistakes
- Comparing the total ROI of investments held for different lengths of time, when the annualised figure is the fair comparison.
- Leaving buying and selling costs out of the amount invested, which makes the ROI look better than the real return.
Frequently asked questions
How is ROI calculated?
ROI is the gain divided by the cost. Take the final value, subtract the amount invested, divide by the amount invested and multiply by 100. Investing 10,000 that grows to 13,000 gives a net profit of 3,000 and an ROI of 30%.
What is annualised ROI and why does it differ?
Total ROI ignores how long you held the investment, so a 30% return over three years looks the same as 30% in one year. Annualised ROI spreads it out using a compound rate. A 30% total return over 3 years is about 9.1% a year, because growth compounds rather than adding up in a straight line.
Does ROI account for fees or tax?
Not on its own. This calculator works from the gross amount invested and the gross final value, so to be accurate you should include buying and selling costs in the amount invested and subtract tax from the final value. Otherwise the ROI will look higher than your real return.
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