ROI Calculator
Calculate return on investment (ROI) percentage for any investment. Optionally calculate annualized ROI (CAGR) if you know the time period.
What you put in
What you got back (total value)
How to Calculate ROI
ROI (Return on Investment) measures the efficiency of an investment. The formula is:
ROI = (Final Value − Initial Investment) ÷ Initial Investment × 100
A $10,000 investment that returns $14,500 has an ROI of 45%. ROI doesn't account for time — a 45% ROI over 10 years is much less impressive than 45% ROI over 6 months. That's why annualized ROI (CAGR) matters when comparing investments over different time horizons.
ROI vs. CAGR (Annualized ROI)
CAGR (Compound Annual Growth Rate) is annualized ROI — it shows the equivalent yearly growth rate, assuming compounding. Formula: CAGR = (Final Value ÷ Initial Value) ^ (1 ÷ Years) − 1. The S&P 500's long-run CAGR is approximately 10%. Individual investments and businesses should be benchmarked against relevant alternatives.
ROI for Business and Ecommerce
For product businesses and ecommerce, ROI typically measures return on inventory investment — the profit earned per dollar of product cost. Amazon FBA sellers use ROI to evaluate whether the return on product investment justifies the cash tied up in inventory. Use the Amazon FBA ROI Calculator or Shopify ROI Calculator for platform-specific calculations. For overall business profitability, see the Profit Margin Calculator.
Frequently Asked Questions
What is a good ROI?
It depends entirely on the investment type, risk level, and time period. Stock market investors often target 10%+ annually. Real estate investors aim for 8–15%. Business investments and product inventory should typically yield 50–200%+ to justify the risk and capital tied up. Compare ROI against your next best alternative use of the same capital — that's your real benchmark.
What is the difference between ROI and profit margin?
Profit margin measures profit as a percentage of revenue. ROI measures profit as a percentage of the capital invested. A business can have high margins but low ROI if it requires enormous capital to operate. Use both metrics: margin tells you pricing efficiency, ROI tells you capital efficiency. See the Profit Margin Calculator for margin analysis.
Does ROI account for risk?
Basic ROI doesn't factor in risk. A 30% ROI from a government bond and a 30% ROI from a startup investment are not equivalent — the startup carries far higher risk of total loss. Risk-adjusted ROI measures like Sharpe ratio or hurdle rates (minimum required return given the risk level) provide a more complete picture for comparing investments with different risk profiles.
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