ROI calculator
Measure gain against the money invested.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
ROI is a simple ratio: net gain divided by total outlay. Total outlay includes the initial investment and any additional costs you enter, and net gain is proceeds minus total outlay. Include cash distributions already received, such as dividends or coupons, in total proceeds so the return is not understated.
Total outlay = initial investment + additional costs; net gain = proceeds − total outlay; ROI = net gain ÷ total outlay.
ROI does not account for how long the investment was held. Use CAGR or IRR when timing and interim cash flows matter.
Assumptions
- Initial investment is greater than zero; total outlay, including entered additional costs, is the ROI denominator.
- Initial investment, proceeds, and additional costs use the same currency. Include interim distributions already received in total proceeds.
- Additional costs are entered as a total amount rather than a tax or legal calculation.
- The result is not annualized unless a separate time-based model is used.
Worked example
$1,000 initial investment, $50 costs, $1,200 proceeds
Total outlay is $1,000 + $50 = $1,050. Net gain is $1,200 − $1,050 = $150, so ROI is $150 ÷ $1,050 ≈ 14.29%.
Step by step
- Add up the total outlay. $1,000 initial investment + $50 additional costs = $1,050.
- Find the net gain. $1,200 total proceeds − $1,050 total outlay = $150.
- Divide the gain by the outlay. $150 ÷ $1,050 = 0.142857.
- Express it as a percentage. 0.142857 × 100 = 14.29% ROI. Leaving out the $50 of costs would overstate it as $200 ÷ $1,000 = 20%.
How to read your result
ROI is net gain as a percentage of everything put in. Net gain is proceeds minus total outlay, Total outlay is the initial investment plus additional costs, and Total proceeds repeats what you received. The bar chart shows the dollar amounts; the ROI percentage sits apart from them.
The figure is only as complete as the inputs. Proceeds should include any dividends, interest, or rent already received, and additional costs should include commissions, fees, and other money spent to hold or sell the investment. A negative ROI means proceeds did not cover the outlay.
ROI does not account for time. A 14.29% ROI earned over one year and the same ROI earned over three years are different results: over three years it works out to about 4.55% a year. The CAGR calculator annualizes a start and end value, and IRR handles cash flows at several dates.
What changes the result most
- Additional costs
- Costs are in the denominator and reduce the gain. Raising costs from $50 to $150 cuts ROI from 14.29% to 4.35%.
- Proceeds
- Proceeds of $1,300 instead of $1,200 give an ROI of 23.81%. Proceeds of $900 give −14.29%, a $150 loss on the $1,050 outlay.
- Holding period
- Not part of the ROI formula, but it changes what the number means: $1,050 growing to $1,200 is a CAGR of 14.29% over one year and 4.55% over three years.
Questions
Does ROI include time?
No. A 15% ROI over one year and over five years are not equivalent outcomes. Use CAGR or IRR for a time-aware comparison.
Can ROI be negative?
Yes. If total outlay exceeds proceeds, the net gain is negative and the ROI shows the percentage loss relative to total outlay.
Why does the calculation include additional costs in the denominator?
The ROI compares net gain with all modeled money spent: the initial investment plus any additional costs you enter. This uses total outlay as the basis for the percentage.
Should taxes be included?
Only as an amount you know and choose to enter. The calculator does not apply tax law or estimate local taxes.
How do you calculate ROI?
ROI = (total proceeds − total outlay) ÷ total outlay × 100, where total outlay is the initial investment plus any additional costs. For $1,000 invested, $50 of costs, and $1,200 received, ROI = ($1,200 − $1,050) ÷ $1,050 = 14.29%.
What is a good return on investment?
There is no single benchmark. An ROI means more when it is annualized and compared over the same period with an alternative of similar risk, such as a savings account’s APY for money that must stay safe. A higher ROI that took longer to earn, or that came with more risk of loss, is not directly comparable.
More in Savings & investing
Sources
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.