ROI Calculator
ROI = net gain ÷ total cost. Enter what you invested, what you got back, any fees and dividends, and how long you held it. The calculator shows your net gain, total ROI and annualized ROI, the yearly rate that makes returns over different lengths of time comparable.
Your investment Example values Replace them with your own numbers. Amounts work in any currency, as long as all of them use the same one.
A vs B
| Measure | Investment A | Investment B |
|---|
- A: compound path at the annualized ROI
- A: straight line (simple ROI)
- B: compound path
- B: straight line
Same ROI, different holding periods
Investment A’s total ROI held fixed. Only the time it took changes. Short periods inflate the annualized figure; long periods shrink it.
| Holding period | Total ROI | Simple ROI per year | Annualized ROI |
|---|
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How the ROI calculator works
- Total cost. Amount invested + fees and other costs. Fees are treated as paid at the start, so they raise the cost basis.
- Total returned. Final value (sale proceeds or current value) + income received, such as dividends or interest you took as cash.
- Net gain. Total returned − total cost.
- ROI. Net gain ÷ total cost. This is the whole-period return. It says nothing about how long it took.
- Years. Years + months ÷ 12, or the days between the two dates ÷ 365.25.
- Annualized ROI. The constant yearly rate that grows the total cost into the total returned over that many years.
The SEC defines the basic idea in its rate of return help page: “The annual rate of return is the percentage change in the value of an investment.” The annualized formula is the one US mutual funds must use for the average annual total return in their prospectus. The SEC’s Form N-1A (Item 26(b)(1)) tells funds to find “the average annual compounded rates of return” using
Solve for T and you get T = (ERV ÷ P)^(1 ÷ n) − 1, the same as annualized ROI here. Form N-1A also has funds deduct sales loads and recurring fees and assume distributions are reinvested, which is why this calculator puts fees in the cost and income in the return.
Simple ROI per year vs annualized ROI
Dividing ROI by the number of years is quick, but it ignores compounding. Investor.gov defines compound interest as “Interest paid on principal and on accumulated interest.” Investment growth works the same way: each year’s gain also grows in later years. So for a gain held longer than a year, the simple figure is too high.
| Total ROI and period | Simple ROI per year | Annualized ROI | Check |
|---|---|---|---|
| +100% over 10 years | 10.00% | 7.18% | 1.0718^10 ≈ 2.00 |
| +48.77% over 4.5 years | 10.84% | 9.23% | 1.0923^4.5 ≈ 1.488 |
| +20% over 1.5 years | 13.33% | 12.92% | 1.1292^1.5 ≈ 1.20 |
| −30% over 3 years | −10.00% | −11.21% | 0.8879^3 ≈ 0.70 |
| +5% over 2 months | 30.00% | 34.01% | 1.05^6 ≈ 1.340 |
For exactly one year the two match. Under one year, annualized ROI is the larger one, because it compounds the short-period gain several times.
Why annualizing a short period exaggerates
Annualizing assumes the return you got repeats, at the same rate, for the rest of the year. A 5% gain in two months becomes 1.05^6 − 1 = 34.01% a year. A 10% gain in one month becomes 1.10^12 − 1 = 213.84% a year. Neither number tells you what will happen next.
Investment performance standards forbid this. The CFA Institute’s overview of the Global Investment Performance Standards (GIPS) states: “Returns for periods of less than one year must not be annualized.” The calculator still shows the figure for short periods, with a warning, so you can see how large it gets. For holdings under a year, compare the total ROI instead.
ROI vs CAGR
ROI is a whole-period percentage. CAGR, the compound annual growth rate, is a yearly rate between a start value and an end value. Annualized ROI uses the CAGR formula. The difference is in the inputs:
| ROI | Annualized ROI (this page) | CAGR | |
|---|---|---|---|
| Answers | How much did I make in total? | What yearly rate did my money earn? | What yearly rate did the value grow at? |
| Time | Ignored | Compounded over the holding period | Compounded over the period |
| Fees | In the cost | In the cost | Usually not, unless already in the values |
| Dividends taken as cash | In the return | In the return | Usually not, unless already in the values |
| Use it for | One investment, one period | Comparing investments held for different lengths | Growth of a price, revenue or index |
To find the yearly growth rate of a price or balance between two dates, or the end value at a given rate, use the CAGR calculator.
Worked examples
1. The default example: fees and dividends over 4.5 years
- Invested 10,000, paid 150 in fees. Total cost = 10,150.
- Sold for 14,500 and received 600 in dividends as cash. Total returned = 15,100.
- Net gain = 15,100 − 10,150 = 4,950. ROI = 4,950 ÷ 10,150 = 48.77%.
- Annualized ROI = 1.4877^(1 ÷ 4.5) − 1 = 9.23% a year. Simple ROI per year = 48.77% ÷ 4.5 = 10.84%.
Without the fees and dividends, ROI would be 45.00% and annualized ROI 8.61%. Small items move the result.
2. Comparing two investments of different lengths
Investment B: invested 10,000, final value 12,000, held 1.5 years. ROI = 20.00%, annualized = 1.20^(1 ÷ 1.5) − 1 = 12.92%. A made more money in total (48.77% vs 20.00%), but B grew faster per year (12.92% vs 9.23%). Tick “Compare with a second investment” to see this in the calculator.
3. A total loss
Invested 5,000, final value 0, no income. Net gain = −5,000, ROI = −100%, and annualized ROI is also −100% for any holding period: no positive yearly rate can turn 5,000 into 0.
4. Losing more than you put in
With margin, short selling or some derivatives, the final value can be negative (you owe money). Enter it as a negative number. If total returned is below zero, ROI is below −100% and there is no annualized ROI, because no yearly rate compounds a positive amount into a negative one. The calculator says so instead of printing a misleading number.
Edge cases the calculator handles
- Zero or negative amount invested. ROI divides by the total cost, so a cost of 0 or less has no ROI. The calculator asks for an amount above 0.
- Holding period under one year. Annualized ROI is shown with a warning (see above). Periods shorter than one day are rejected.
- End date before start date. Rejected with a message.
- Total loss and losses above 100%. −100% annualized for a loss of everything; “not defined” when the total returned is negative.
- Leap years. Dates are counted in days and divided by 365.25, so 1 Jan 2024 to 1 Jan 2025 (366 days) is 1.002 years.
Fees matter more than they look
Fees cut both ROI and annualized ROI. The SEC’s Investor Bulletin How Fees and Expenses Affect Your Investment Portfolio shows a $100,000 investment growing 4% a year for 20 years. With a 0.25% annual fee, “the portfolio would be worth approximately $208,000”. With a 1.00% fee, “approximately $179,000”. Enter every commission and account fee you paid. Ongoing fees are often already taken out of the final value of a fund, so do not count them twice.
Limits of a single-ROI calculation
- One cash flow in, one out. The calculator assumes all money went in at the start and came back at the end. If you added money over time (for example monthly purchases) or withdrew part of it, the timing matters and a money-weighted return such as IRR/XIRR is the right tool. For regular purchases, the DCA calculator fits better.
- Income timing. Dividends are treated as received at the end. Dividends received earlier and spent are worth slightly more than this shows; dividends reinvested should be left in the final value instead of the income field.
- Taxes and inflation are not included. Use the capital gains tax calculator for the tax side.
- Risk is not in the number. Two investments with the same ROI can have very different swings along the way.
- Past results. ROI describes what happened. It does not predict future returns.
FAQ
How do you calculate ROI?
ROI = net gain ÷ total cost × 100. Net gain is what you got back (final value plus any dividends or interest received) minus what you put in (amount invested plus fees). Example: invest 10,000, pay 150 in fees, receive 600 in dividends and sell for 14,500. Net gain = 14,500 + 600 − 10,150 = 4,950, so ROI = 4,950 ÷ 10,150 = 48.77%.
What is annualized ROI and how is it calculated?
Annualized ROI is the constant yearly rate that, compounded over the holding period, turns the total cost into the total amount returned. Annualized ROI = (1 + ROI)^(1 ÷ years) − 1. A 48.77% ROI over 4.5 years is 1.4877^(1 ÷ 4.5) − 1 = 9.23% a year. It is the same idea as the average annual total return that the SEC’s Form N-1A asks mutual funds to report, P(1 + T)^n = ERV.
Why is annualized ROI lower than ROI divided by the number of years?
Because annualized ROI compounds: each year’s gain also earns a return in later years. Dividing ROI by the years ignores that, so for a gain held longer than one year it overstates the yearly rate. A 100% ROI over 10 years is 10% a year by simple division but 7.18% a year compounded, because 1.0718^10 ≈ 2. For losses the simple figure understates how bad each year was.
What is the difference between ROI and CAGR?
ROI is the total percentage gain or loss over the whole holding period, with no time element. CAGR, the compound annual growth rate, is the yearly rate that links a start value to an end value. Annualized ROI uses the CAGR formula, applied to your total cost (including fees) and your total amount returned (including dividends received), so it can differ from the CAGR of the price alone.
Can you annualize a return for less than one year?
You can do the arithmetic, but the result assumes the same return repeats for a full year, which rarely happens. A 5% gain in two months annualizes to 34.01% a year. The CFA Institute’s GIPS standards say returns for periods of less than one year must not be annualized. This calculator shows the figure with a warning so you can see how large it gets.
What is a good ROI?
There is no single good number. Compare an ROI only with alternatives over the same holding period and with similar risk, and compare annualized figures when the periods differ. A 40% ROI over 10 years is about 3.4% a year, while a 20% ROI over 2 years is about 9.5% a year. Fees, taxes and inflation also reduce what you keep.
Related tools and templates
- CAGR calculator
Yearly growth rate between two values. - DCA calculator
Returns from regular purchases over time. - Dividend calculator
Income from a dividend-paying holding. - Capital gains tax calculator
Estimate the tax on a gain. - Compound interest calculator
Project growth at a fixed rate. - Investment tracker
Record cost, fees, income and value per holding.
Educational tool only, not financial or investment advice. Results depend on the numbers you enter and assume one investment at the start and one value at the end. They do not include taxes or inflation and do not predict future returns. Sources: SEC, Rate of Return Definition, SEC, Form N-1A, Item 26(b)(1), Investor.gov, Compound Interest, Investor.gov, How Fees and Expenses Affect Your Investment Portfolio, CFA Institute, Overview of the Global Investment Performance Standards. Retrieved 30 Oct 2026.