ROI Calculator

Is your investment paying off? Our free **ROI Calculator** gives you a clear, simple percentage to measure the **investment profitability** of stocks, real estate, or your own business projects.

Calculate Your ROI

Find the return on your investment.

Return on Investment (ROI)

0%

Net Profit: $0

What is an ROI Calculator?

An **ROI Calculator** is a simple tool used to measure the success or profitability of an investment. **ROI** stands for **Return on Investment**, and it's one of the most common metrics in all of finance. It answers a very simple question: "How much profit did I make compared to how much I spent?" This **investment profit calculator** expresses that gain or loss as a simple percentage, making it incredibly easy to compare the **investment profitability** of different opportunities.

What is the Formula for the ROI Calculator?

The formula to **calculate ROI** is very straightforward. You first find the "Net Profit" of the investment, and then you divide that profit by the original cost.

Net Profit = Final Value - Initial Investment

ROI (%) = (Net Profit / Initial Investment) × 100

  • Initial Investment: This is the total cost you paid, including fees, commissions, or renovation costs (for real estate).
  • Final Value: This is the price you sold the investment for (or its current market value if you still own it).

Solved Example

Let's use the calculator's default values for a simple stock investment:

  • Initial Investment (Cost): $10,000
  • Final Value (Sale Price): $15,000

Calculation Steps:

1. Find Net Profit:
$15,000 (Final Value) - $10,000 (Initial Investment) = $5,000

2. Calculate ROI:
($5,000 (Net Profit) / $10,000 (Initial Investment)) × 100

ROI = 50%

This investment had a **Return on Investment** of 50%. You earned back 50 cents for every dollar you invested.

Use Cases / Practical Applications

This simple **investment profit calculator** can be used almost anywhere in business and personal finance:

  • Stock Investing: Quickly compare the performance of two different stocks you bought.
  • Real Estate: Calculate the ROI on a flip. (e.g., You bought a house for $200k, spent $50k on repairs, and sold it for $300k. Your ROI is ($50k profit / $250k cost) = 20%).
  • Business Decisions: A company can calculate the ROI of a new marketing campaign. (e.g., We spent $1,000 on ads, and it generated $3,000 in new profit. The ROI is 200%).
  • Personal Projects: You can even calculate the ROI of home improvements. (e.g., You spent $5,000 on a new bathroom, and it increased your home's value by $15,000. That's a 200% ROI).

Standard or Common Reference Values

A "good" ROI is completely relative. It depends on the risk, the industry, and the time frame. However, here are some common benchmarks:

  • S&P 500 (Stock Market): The historical *annual* average **return on investment** is around **8-10%**. This is often used as the baseline. If your investment's *annual* ROI is less than this, you might have been better off just buying an index fund.
  • Real Estate (Rental): Investors often look for a "Cash-on-Cash Return" (a form of ROI) of **8-12%** per year.
  • Business "Hurdle Rate": Businesses often won't approve a new project unless its expected ROI is *higher* than a "hurdle rate," which might be **15-20%**, to justify the risk.

The most important thing to note is that ROI does not include TIME. A 50% ROI is amazing if it took 1 year, but it's terrible if it took 20 years. That's ROI's biggest weakness.

Frequently Asked Questions (FAQ)

1. What is the biggest limitation of the ROI formula?

The main limitation of **ROI** is that it does not account for *time*. A 50% ROI is fantastic if it took 1 year, but it's very poor if it took 20 years (less than 2.5% per year). For comparing investments over different time periods, it's better to use our CAGR Calculator.

2. What is a 'good' ROI?

A 'good' ROI is entirely relative to the risk and time involved. A 'good' ROI for a safe 1-year government bond might be 5%. A 'good' ROI for a high-risk tech startup investment might be 50% or more. Many investors use the S&P 500's historical average annual return (around 8-10%) as a benchmark to beat.

3. Does this ROI calculator include taxes and fees?

This simple **investment profit calculator** does not automatically include them. For the most accurate 'Net ROI' calculation, you should include all fees (like commissions or closing costs) in your 'Initial Investment' and use your 'Final Value' *after* any capital gains taxes are paid.

Calculating **ROI** is perfect for simple comparisons. For multi-year investments, the next step is to find the *annualized* return using our CAGR Calculator.

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