The formula
How it works
Return on investment (ROI) measures how much an investment has gained or lost relative to what you put in, as a percentage. Add a holding period and the calculator also shows the annualised return, so investments held for different lengths can be compared fairly.
FAQ
What is the difference between total and annualised ROI?
Total ROI is the whole gain over the entire period; annualised ROI expresses it as an equivalent yearly rate. A 50% gain over three years is a healthy 14.5% a year — the annualised figure is what lets you compare across time.
Can ROI be negative?
Yes. If the final value is less than the amount invested, the ROI is negative, showing a loss. An ROI of −20% means you ended with 80% of what you started.
What counts as a “good” ROI?
It depends entirely on the asset and the time held — a 7–10% annualised return is typical for a diversified stock portfolio over the long run, while property or business ventures may target more to offset extra risk and effort. Always compare against what you would have earned from a safer, similar-length alternative.
Does this ROI include fees, taxes or costs?
No — it only compares the amount invested against the final value you enter, so any fees, taxes or extra costs should be folded into those two figures yourself. Leaving them out overstates the real return you kept.
How is ROI different from CAGR?
ROI and the annualised figure shown here are effectively the same idea as CAGR (compound annual growth rate) — both smooth a multi-year gain into a yearly rate. CAGR is simply the more formal name used when discussing investment performance over several years.
What if I add or withdraw money partway through?
This calculator assumes a single lump sum invested at the start and a single final value at the end, so top-ups or withdrawals during the period will distort the result. For cash flows added at different times, a money-weighted return method such as IRR is more accurate.
Can I use ROI to compare different currencies?
Yes, as long as you keep each calculation in its own currency and only compare the resulting percentages, not the raw amounts. Switch the currency selector to match the investment you are entering so the profit figure displays correctly.
About the ROI calculator
This calculator works out your return on investment — the percentage gain or loss on money you have put in — and, if you enter a holding period, the annualised rate that goes with it. ROI is the most common yardstick for judging whether an investment was worthwhile, because turning a profit into a percentage lets you compare deals of very different sizes on equal terms. A £100 profit means one thing on £200 and quite another on £20,000.
How to use it
Enter the amount you invested and what it is now worth, then optionally the number of years you held it. The calculator shows the profit or loss, the total ROI, and the annualised return. For example, turning £1,000 into £1,500 is a £500 profit and a 50% ROI; held over three years that is about 14.5% a year. Change the currency to match your investment, and use the annualised figure whenever you are comparing investments held for different lengths of time.
The formula
Total ROI is the profit over the amount invested, . To annualise it over years, you find the equivalent compound rate, , then multiply by 100. Annualising matters because a simple ROI ignores time — doubling your money is impressive in one year but ordinary over twenty.
Where it is used
ROI is used everywhere money is put to work. Investors use it to compare shares, funds and property; businesses use it to judge projects, equipment and marketing campaigns; and individuals use it to weigh up anything from a home improvement to a training course. Because it is so simple, it is also easy to misuse — always check what costs are included and over what period, since a headline ROI with no time frame can flatter a slow investment.