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ROI calculator: return on investment and annualized return

Measure how profitable an investment, a marketing campaign or a piece of equipment was: net profit, ROI percentage and annualized return to compare different holding periods.

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Results

Net profit

$3,950

Total ROI

39.50%

Annualized return (CAGR)

11.74%

Strong return Above the long-run average return of the stock market.
Money multiple
1.40 ×
Average profit per year
$1,317

Annualized return by holding period

Total ROIAnnualized return (CAGR)Average profit per year
1 years current39.50%39.50%$3,950
2 years current39.50%18.11%$1,975
3 years current39.50%11.74%$1,317
5 years current39.50%6.88%$790
7 years current39.50%4.87%$564
10 years current39.50%3.38%$395

Measuring how well an investment paid off

Return on investment (ROI) answers a simple question: for every dollar I put in, how much did I make? It works for stocks, a property you sold, a piece of equipment, a training course or a marketing campaign. This calculator includes income received along the way and costs, then converts the result into an annualized return so you can compare investments held for different periods.

The formulas

Net profit = final value + income received − costs − amount invested

ROI = net profit ÷ amount invested × 100

Annualized return (CAGR) = (amount returned ÷ amount invested)^(1 ÷ years) − 1

CAGR (compound annual growth rate) is the steady yearly return that would have produced the same result. The money multiple shows how many times you got your stake back.

Worked example: a stock portfolio held for 3 years

You invest $10,000, receive $600 in dividends, pay $150 in fees, and sell everything for $13,500 after 3 years.

  1. Net profit: 13,500 + 600 − 150 − 10,000 = $3,950.
  2. Total ROI: 3,950 ÷ 10,000 = 39.5%.
  3. Money multiple: 13,950 ÷ 10,000 = 1.395×.
  4. Annualized return: 1.395^(1/3) − 1 ≈ 11.74% a year.

Same ROI, very different results

Holding period Total ROI Annualized return Average profit per year
1 year 39.5% 39.50% $3,950
2 years 39.5% 18.11% $1,975
3 years 39.5% 11.74% $1,317
5 years 39.5% 6.88% $790
7 years 39.5% 4.87% $564
10 years 39.5% 3.38% $395

A 39.5% gain over ten years is only about 3.4% a year, less than a high-yield savings account paid in 2025.

ROI, IRR and marketing ROI

ROI and CAGR suit a single investment with a single exit. When money goes in or comes out at several dates, the IRR (internal rate of return) discounts each cash flow at its own date and gives a fairer picture. In marketing, ROI is often calculated as (revenue attributable to the campaign − campaign cost) ÷ campaign cost; use gross profit rather than revenue if you want the true return.

Common mistakes

  • Leaving out costs: commissions, management fees, closing and selling costs all cut into ROI.
  • Ignoring taxes: in the US, gains on assets held more than a year are taxed at 0%, 15% or 20% at the federal level, while short-term gains are taxed as ordinary income.
  • Forgetting inflation: subtract it from the annualized return to see your real gain.
  • Ignoring risk: a high return often pays you for taking a big risk; compare like with like.

Frequently asked questions

How do you calculate ROI?

ROI = net profit ÷ amount invested × 100, where net profit is the final value plus income received, minus costs and the original investment. Investing $10,000, selling for $13,500 after $600 of dividends and $150 of fees gives a $3,950 profit and a 39.5% ROI.

Why annualize ROI?

A 39.5% return means something very different over one year than over ten. The annualized return, or CAGR, converts the result into a yearly rate so you can compare investments held for different lengths of time. Here, 39.5% over 3 years is about 11.7% a year.

What is the difference between ROI and IRR?

ROI and CAGR assume one investment at the start and one result at the end. IRR (internal rate of return) weighs every cash flow at its actual date, such as monthly contributions, rents or capital calls. Use IRR for rental property or any plan with regular deposits.

What is a good ROI?

It depends on the risk. Treasury bills and high-yield savings paid around 4% in 2025, and the S&P 500 has returned roughly 10% a year before inflation over the long term, with big drawdowns along the way. A high return on a very risky bet is not necessarily better than a modest, safe one.

Does ROI include taxes and inflation?

No, it is a pre-tax, nominal figure. In the US, gains held over a year are taxed at long-term capital gains rates of 0%, 15% or 20%; in the UK, gains above the annual exempt amount are subject to capital gains tax. Subtract taxes from the profit and inflation from the annualized return to see your real gain.

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Results are estimates provided for information purposes. They do not replace professional advice.