Return on Investment (ROI) Calculator
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What is ROI?
Return on Investment (ROI) is a fundamental performance measure used to evaluate the efficiency or profitability of an investment. It measures the amount of return on a particular investment, relative to the investment's cost.
How to Use This Tool
- Initial Investment: Enter the total amount you invested.
- Final Value of Investment: Enter the total value of your investment at the end of the period (including the principal).
Interpreting the Result
The result is shown as a percentage. A positive ROI means the investment was profitable, while a negative ROI means it resulted in a loss.
ROI is a simple, universal metric. For investments over multiple periods with complex cash flows, consider using our IRR Calculator for a more time-sensitive analysis.
Return on Investment (ROI):
0.00%
Frequently Asked Questions (FAQ)
What is the ROI formula? ▼
The basic formula for Return on Investment is:
ROI = ((Final Value - Cost of Investment) / Cost of Investment) × 100%
For example, if you spend $1,000 on stocks and sell them for $1,200, your net profit is $200. $200 / $1,000 = 0.20, or 20% ROI.
How to calculate ROI for Rental Property? ▼
For real estate, you must account for:
- Rental Income: The monthly cash flow you receive.
- Operating Expenses: Maintenance, property taxes, insurance.
- Mortgage Payments: Principal and interest.
A simple "Cash-on-Cash" ROI formula: (Annual Cash Flow / Total Cash Invested) × 100.
How to calculate ROI for Marketing (Social Media / Email)? ▼
Digital marketing ROI tracks revenue generated from your campaigns. The formula is:
Marketing ROI = (Revenue from Campaign - Ad Spend) / Ad Spend
This works for Facebook Ads, Google Ads, and Email Marketing. If you spend $500 on ads and generate $1,500 in sales, your ROI is 200%. This is often called ROAS (Return on Ad Spend).
What is Annualized ROI (CAGR)? ▼
Standard ROI doesn't account for time. A 20% return over 1 year is great, but a 20% return over 10 years is poor.
Annualized ROI (also known as CAGR - Compound Annual Growth Rate) tells you the yearly growth rate, allowing you to compare investments of different durations fairly.
💡 Our calculator automatically provides the annualized figure.
What is considered a good ROI? ▼
A "good" ROI depends on the asset class and risk profile:
- Stock Market: Historically 7-10% (inflation-adjusted).
- Real Estate: Typically 8-12% for rental yields or 15%+ for flips.
- Small Business / Marketing: Often targets 20%+ or even 100%+ (2x ROAS) to offset active effort and risk.
What is the difference between ROI and IRR? ▼
ROI (Return on Investment) only measures total profit relative to cost, ignoring time. IRR (Internal Rate of Return) accounts for the time value of money. For long-term investments with multiple cash flows, IRR is a more accurate metric than ROI.