ROI Calculator

Evaluate the efficiency of an investment or compare the profitability of different investment choices. Calculate both total Return on Investment and Annualized ROI.

Investment Details

Amount Invested ($)

Amount Returned / Final Value ($)

The total value of the investment now.

Additional Expenses ($)

Investment Duration (Years)

Required for annualized ROI calculation.

Understanding ROI Formulas

Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment.

Standard ROI Formula

ROI = ((Net Profit) / Cost) × 100

Where Net Profit = Final Value - Initial Investment.

Annualized ROI Formula

AGR = ((Final / Initial)^(1/n)) - 1

Where 'n' is the number of years. This allows you to compare investments held for different lengths of time.

ROI vs. Annualized ROI: An Example

It is crucial to distinguish between total return and annualized return, especially for long-term investments.

The 5-Year Scenario

You invest $1,000.
After 5 years, it is worth $1,500.
Total ROI: 50% (You made $500 profit on $1,000).
Annualized ROI: ~8.45% (You didn't make 10% per year, because of compounding).

Comparing the 8.45% figure allows you to fairly compare this investment against a savings account or stock market index.