Investment Analyzer

Enter your invested and returned amounts.

💰 Amount Invested $10,000

↩️ Amount Returned (Final Value) $15,000

⏳ Investment Duration

Years

Months

TOTAL ROI PERCENTAGE

50.00%

✅ Profitable Investment

💵

Net Profit $5,000

📅

Annualized ROI 14.47%

📊

Total Gain 1.50x

Invested Returned

What is ROI?

Return on Investment (ROI) is the most popular metric for evaluating the profitability of an investment. It measures the gain or loss generated relative to the amount of money invested.

The Input

You start with your Total Cost of Investment. This includes purchase price, fees, and renovation costs.

The Output

You determine the Final Value. This is the sale price or current market value plus any income earned (like dividends).

The Calculation

Subtract cost from value to get Net Profit. Divide Net Profit by Cost to get your ROI percentage.

ROI Formulas Explained

➗

Simple ROI %

((Final Value - Cost) / Cost) × 100

📅

Annualized ROI

((Final / Cost) ^ (1 / Years)) - 1

💵

Net Profit

Final Value - Total Cost

Why Annualized ROI Matters

Simple ROI can be misleading if you don't account for time. A 50% return is amazing if it happens in 1 year, but terrible if it takes 20 years.

⏱️

Time Comparison

Annualized ROI (CAGR) breaks down the return into a yearly average, allowing you to compare a 6-month trade against a 10-year bond.

📉

Compound Growth

It assumes profits are reinvested. This gives a truer picture of wealth accumulation over long periods.

🏠

Real Estate Usage

In property, simple ROI (Cash-on-Cash) is common for rental yield, but Annualized ROI (IRR) is better for flipping houses.

What is a "Good" ROI?

📈 Stock Market

7% - 10%

S&P 500 historical average
Inflation adjusted: ~7%
Includes dividends reinvested

🏠 Real Estate

8% - 12%

Rental Yield: 4% - 8%
Appreciation: 3% - 5%
Leverage can boost this significantly

🚀 Small Business

15% - 30%+

High risk, high reward
Marketing ROI often targets 400%+ (4:1)
Requires active management

Frequently Asked Questions

Can ROI be negative?

Yes. If your Final Value is less than your Initial Investment, you have a negative ROI, which represents a financial loss.

What is the difference between ROI and Profit?

Profit is an absolute number (e.g., "$500"), whereas ROI is a percentage (e.g., "10%"). ROI allows you to compare the efficiency of investments of different sizes.

Does ROI include time?

Standard ROI does not account for time. That is why we calculate "Annualized ROI" (CAGR) separately, which tells you the effective yearly growth rate.

How do I calculate ROI for marketing?

Marketing ROI = (Sales Growth - Marketing Cost) / Marketing Cost. It helps determine if an ad campaign was worth the spend.

What is a good ROI for a startup?

Startups are high-risk. Investors typically look for a 30% to 50% internal rate of return (IRR) to justify the risk of failure.

Is ROI calculated on Gross or Net profit?

ROI should be calculated on Net Profit (after expenses). If you calculate it on Gross Profit, you are inflating your actual returns.

What is Cash-on-Cash Return?

In real estate, this is the annual cash flow divided by the actual cash invested (down payment). It differs from total ROI because it ignores mortgage paydown and appreciation.

Does inflation affect ROI?

Yes. If your ROI is 5% but inflation is 6%, your "Real ROI" is actually negative because your purchasing power has decreased.

Can ROI be infinite?

Mathematically, yes. If your initial investment is $0 (e.g., a purely organic viral video making money), your ROI calculation would divide by zero.

How do taxes impact ROI?

The calculator above shows Pre-Tax ROI. Your actual "take-home" ROI will be lower after Capital Gains Tax or Income Tax is applied.