ROI Calculator

Return on Investment (ROI) measures the gain or loss from an investment relative to its cost. Formula: ROI = (Net Gain / Initial Investment) × 100. A 50% ROI means you gained 50% of what you invested.

It depends on the investment type and risk. S&P 500 average: ~10%/year. Real estate: 8–12%/year. High-yield savings: 4–5%. Startup investments: vary wildly. Compare ROI to benchmarks in the same asset class, not across different types.

Annualized ROI (CAGR — Compound Annual Growth Rate) converts total return to an equivalent annual rate, enabling fair comparison across different time periods. A 50% total ROI over 5 years = 8.45% annualized (not 10%, because compounding matters).

ROI compares return to investment cost. Profit margin compares profit to revenue. A business can have a high profit margin but low ROI (tied up too much capital) or low margins but great ROI (asset-light model, high turnover).

Include all costs: purchase price, closing costs, renovations, annual operating costs. Annual return includes rental income and appreciation. ROI = (Annual Profit × Years + Appreciation − All Costs) / Total Investment. Cap rate is a related metric for rental properties.