Investment performance

ROI Calculator

Measure total gain or loss as a percentage of initial cost and estimate an annualized return over the holding period.

Enter dividends, interest, rent or other cash distributions as income. Include fees and taxes in the cost or proceeds when appropriate.

What ROI can—and cannot—show

ROI summarizes gain or loss relative to cost. Annualized return makes holding periods easier to compare, but neither measure describes volatility, liquidity, taxes or the risk taken to earn the result.

Build a complete comparison

  • Include purchase, transaction, maintenance and selling costs
  • Add cash income received during the holding period
  • Compare investments across the same time period
  • Review risk and cash-flow timing alongside the percentage return
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ROI calculator questions

What is a good ROI?

There is no universal target. A return should be evaluated against its time period, risk, liquidity, taxes, fees and realistic alternatives.

Why annualize a return?

Annualizing converts a multi-year result into an equivalent yearly rate, making different holding periods easier to compare.

Educational calculation only; not investment, tax or financial advice.

Published by RVR — Founder & Editor, IQlatorMethodology reviewed September 24, 2026Educational information

Use ROI with a clearly defined cost and return period

Return on investment compares net gain with the amount invested. It is useful only when the numerator, denominator and time period are defined consistently. A high percentage on a small, short project is not directly comparable with a multi-year investment that has different risk and cash flows.

How to use this page

Simple ROI equals gain minus cost, divided by cost, multiplied by 100. The measure does not automatically account for time value, financing, taxes or uneven cash flows. Annualized return or net present value may be better for longer projects.

Practical exampleA project costing $10,000 and returning $12,000 produces a $2,000 gain and a simple ROI of 20%. The meaning differs if that gain took three months versus five years.

Inputs to verify

  • Include implementation, maintenance and exit costs.
  • Use realized or reasonably supportable benefits rather than gross revenue alone.
  • Compare alternatives over the same period and with similar risk assumptions.

Common questions

Can ROI be negative?

Yes. When total return is below total cost, the calculation produces a negative percentage.

Does ROI include risk?

No. Risk must be assessed separately or incorporated through scenario and discount-rate analysis.

Methodology and sources: Uses the standard simple-ROI formula; complex investments may require cash-flow analysis.