How it works
This calculator measures how much profit you've made on an investment relative to what you put in, expressed as a percentage. It answers the question: "Did my money grow, and by how much?"
You enter three pieces of information: the original amount you invested, what that investment is worth now, and how long you held it. The calculator then computes your total return and breaks it down into an annual figure, so you can compare investments across different time horizons fairly.
The formula
Total ROI (%) = ((Final Value − Initial Investment) / Initial Investment) × 100
Annualized ROI (%) = ((Final Value / Initial Investment) ^ (1 / Years) − 1) × 100
The first formula gives your simple return. The second uses compound growth to show what average annual percentage gain you achieved—this is the more useful number when comparing a 2-year investment against a 10-year one.
Worked example
Let's say you invested $5,000 in a stock three years ago. That position is now worth $6,500.
Step 1: Calculate total profit $6,500 − $5,000 = $1,500 gain
Step 2: Express as a percentage of your original investment $1,500 ÷ $5,000 = 0.30 = 30% total ROI
Step 3: Find the annualized return Use the compound formula:
- Final Value ÷ Initial Investment = $6,500 ÷ $5,000 = 1.30
- Raise to the power of (1 ÷ 3 years) = 1.30^0.333 = 1.0914
- Subtract 1 and multiply by 100 = 0.0914 × 100 = 9.14% annualized ROI
This means your $5,000 grew by an average of 9.14% each year over the three-year period. That's the number to use if you're comparing this investment to another that you held for a different length of time.
Common mistakes
Confusing total and annualized returns: If someone tells you they made "30% on a stock," always ask how long they held it. A 30% return over 10 years (about 2.7% annualized) is very different from 30% over one year. This calculator separates both so you see the full picture.
Forgetting to include all cash flows: This calculator assumes you invested a lump sum at the start and haven't added or withdrawn money since. If you made additional contributions or took withdrawals, the result won't be accurate. For those scenarios, a modified Dietz or internal rate of return (IRR) calculation is needed.
Ignoring fees and taxes: The ROI shown here is based on the final market value you enter. If you haven't already subtracted brokerage fees, advisor fees, or capital gains taxes, your actual take-home return will be lower. Always factor these in when evaluating real-world performance.
Misreading negative returns: If your final value is less than your initial investment, the ROI will be negative. This is correct—it means you lost money. A −10% ROI means your investment shrank by one-tenth of its original value.
Things to watch
When comparing ROI across different investments, always use the annualized figure. A bond that returned 8% over 4 years (1.94% annualized) is not the same as a stock that returned 8% over 1 year (8% annualized), even though the total percentage looks identical.
Also remember that past ROI doesn't predict future results. A fund that delivered 12% annualized returns last decade may perform very differently going forward. Use this calculator as a backward-looking assessment tool, not a forecasting one.
This calculator provides an estimate based on the figures you enter. It is not professional financial advice. For investment decisions, consult a qualified financial advisor.