Return on investment sounds simple — profit divided by cost — but two details change the answer more than people expect: whether you've counted every real cost, and whether you've compared returns over the same length of time. This calculator handles both.
How to Use This ROI Calculator
Enter what you initially invested and the final value of that investment. If you paid fees, commissions, or other costs alongside the investment, add them under "additional costs" — they're part of what you actually spent. If the investment paid you income along the way, such as dividends or rent, add that under "income received." Enter the holding period in months to also see your return expressed as an annualized rate, which is what makes returns over different time periods comparable.
How ROI Is Calculated
ROI = (Total Returned − Total Invested) / Total Invested × 100%
Total invested includes your initial amount plus any additional costs. Total returned includes the final value plus any income received. Leaving out fees or income is the most common way ROI calculations mislead — a $10,000 investment with $500 in fees has $10,500 truly at risk, not $10,000.
Why Annualized ROI Isn't Just ROI Divided by Time
A 100% return over two years is not a 50% annual return — it's about 41.4%. The difference is compounding: growing by 41.4% twice in a row multiplies your money by roughly 2×, not by adding 41.4% + 41.4%. This calculator uses the correct compounding formula:
Annualized ROI = (Total Returned / Total Invested)^(1 / years) − 1
Example Calculation
$10,000 invested and grown to $15,000 over 24 months, with no additional costs or income, has a straightforward ROI of 50%. Annualized, that's about 22.5% per year — the constant yearly rate that compounds to the same 50% total gain over two years.
What Affects Your ROI
- Additional costs — fees and commissions raise your true denominator and lower your real ROI, even though the sticker price of the investment didn't change.
- Income received — dividends, rent, or interest add to your return even if the asset's value alone didn't grow much.
- Holding period — the same total ROI is a very different result annualized over one year versus ten.