How to use this calculator
- Amount invested. Enter the total you put in, including any costs of buying.
- Amount returned. Enter the total you got back or the value today, after any costs of selling. Include income received along the way, such as interest, dividends or rent.
- Years held. Enter how long the money was invested. Part years are fine.
You get four results: ROI %, net profit in dollars, annualized ROI and the return multiple. If the amount returned is less than the amount invested, the profit and ROI are negative, which means a loss.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Amount invested
- $10,000
- Amount returned
- $14,000
- Years held
- 3 years
- Return on investment
- 40%
- Net profit
- $4,000
- Annualized ROI
- 11.87%
- Return multiple
- 1.40×
How ROI is calculated
ROI compares profit with cost. First find the net profit: amount returned minus amount invested. Then divide the profit by the amount invested and multiply by 100 to get a percent.
Say you invest $5,000 and get back $6,000. The net profit is $1,000. ROI is $1,000 ÷ $5,000 = 0.20, or 20%. The return multiple is $6,000 ÷ $5,000 = 1.2, meaning you got back 1.2 times what you put in.
Annualized ROI turns the total return into a yearly rate. It is the steady yearly growth rate that would turn the amount invested into the amount returned over the years held. It uses compounding, so it is not just ROI divided by years. This is the same math as the CAGR calculator.
ROI = (R − C) ÷ C × 100, and Annualized ROI = (R ÷ C)^(1 ÷ t) − 1- R
- amount returned
- C
- amount invested (cost)
- t
- years held
- R − C
- net profit
- R ÷ C
- return multiple
How to read the results
Plain ROI ignores time. A 20% return earned in one year is very different from 20% earned over ten. Use annualized ROI when you compare investments held for different lengths of time.
A few things to keep in mind:
- Count all costs. Fees, taxes, repairs and other running costs lower the real return. Leaving them out makes ROI look better than it was.
- ROI says nothing about risk. Two investments can show the same ROI while one was far more likely to lose money.
- Timing of cash is ignored. ROI treats everything as one amount in and one amount out. If money went in or came out at several points, the IRR calculator gives a fairer yearly rate.
- Past returns are not a promise. ROI describes what happened or what you assume will happen. It does not predict future results.
For more detail and examples, see the guide on how to calculate ROI.
Frequently asked questions
What is a good ROI?
There is no single answer. A return is only good or bad compared with something else, such as what the same money could have earned elsewhere at similar risk over the same time. Higher expected returns usually come with a higher chance of loss. Compare annualized ROI figures, not total ROI, when the holding periods are different.
What is the difference between ROI and annualized ROI?
ROI is the total percentage gain or loss over the whole holding period, however long that was. Annualized ROI converts that total into an equivalent yearly rate, taking compounding into account. If the money was held for exactly one year, the two are the same. For longer periods, annualized ROI is lower than total ROI.
Can ROI be negative?
Yes. If you get back less than you put in, the net profit is negative and so is ROI. An ROI of −25% means you lost a quarter of the amount invested. The lowest possible ROI is −100%, which means the whole amount was lost, unless you owe more than you invested.
How is ROI different from profit margin?
ROI divides profit by the amount invested, so it measures how hard your money worked. Profit margin divides profit by sales revenue, so it measures how much of each dollar of sales is kept as profit. They answer different questions. A business can have a thin margin and still earn a high ROI if it needs little money tied up.
What does the return multiple mean?
The return multiple is the amount returned divided by the amount invested. A multiple of 1 means you broke even. A multiple of 2 means you got back twice what you put in, which is a 100% ROI. A multiple below 1 means a loss. It is a quick way to state a result without percentages.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.