How this calculator works
ROI = (amount returned − amount invested) ÷ amount invested.
Include all costs in the amount invested and all income (sale proceeds, dividends, rent) in the amount returned.
Annualized ROI = (1 + ROI)^(1 ÷ years) − 1.
For several cash flows at different times, IRR is more accurate.
Be consistent about what counts: for a rental, include closing costs and repairs in the investment and rent, net of expenses, in the return.
Worked example
$12,000 invested, $16,500 back after 3 years
- Net profit: $4,500.
- ROI: 37.5%.
- Annualized: about 11.2% a year.
Questions people ask
What is a good ROI?
It depends on risk and time. Compare with what you could earn in a low-risk alternative over the same period.
Why annualize ROI?
A 37.5% return over 3 years and 20% over 1 year aren’t comparable until both are expressed per year.
How do I calculate marketing ROI?
Use profit from the campaign, not revenue: (gross profit attributable − campaign cost) ÷ campaign cost.
Does ROI include taxes?
Only if you include them. After-tax ROI is the most realistic for personal decisions.
What does a negative ROI mean?
You got back less than you put in. −20% means you lost a fifth of the money invested.
Last reviewed October 2, 2026