Saving & investing
ROI Calculator
Work out the return on an investment from what you paid, what you got back, income and costs, plus the annualised return that makes holding periods comparable.
Return on investment
50%
$5,000.00 gained on $10,000.00 over 5 years
Net gain
$5,000.00
$15,000.00 back on $10,000.00 paid
Annualised return
8.45%
a year, compounded over 5 years
Money multiple
1.50x
What came back for each unit paid
How 50% was worked out
Everything that came back, $15,000.00 returned plus $0.00 of income, is $15,000.00. Everything it cost, $10,000.00 invested plus $0.00 of costs, is $10,000.00. The gain of $5,000.00 divided by that cost is 50%.
Why 50% over 5 years is 8.45% a year
ROI does not say how long the money was tied up. The yearly rate that compounds $10,000.00 into $15,000.00 over 5 years is (1 + 0.5)^(1 ÷ 5) − 1 = 8.45%. Adding it up simply, 50% ÷ 5 = 10%, overstates it, because each year's growth builds on the last.
Before tax and inflation. An estimate, not financial advice, providers may calculate differently.
The same 50% over other holding periods
| Held for | Same ROI as a yearly rate |
|---|---|
| 1 year | 50% |
| 3 years | 14.47% |
| 5 years (yours) | 8.45% |
| 10 years | 4.14% |
| 20 years | 2.05% |
The longer a gain takes, the less it is worth each year: compare investments by their yearly rate, not by their ROI alone.
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How this is calculated
The calculator adds what the investment gave back, the sale price or current value plus any income paid out, and compares it with everything it cost you, the purchase price plus fees. The difference over the cost is the return on investment, shown as a percentage of the cost. Because a total return says nothing about how long it took, the calculator also restates it as the steady yearly rate that would have grown the cost into the same result over the years you held it, which is the figure to compare between investments held for different lengths of time.
ROI(R − C) ÷ C · annual rate = (R ÷ C)1 ÷ t − 1
- R
- Amount returned plus Income received
- C
- Amount invested plus Costs and fees
- t
- Years held
What this does not include
- Tax on the gain or the income; enter after-tax amounts to see an after-tax ROI.
- Inflation: a nominal gain can be a loss in what the money buys.
- The timing of money added or withdrawn part way through; this assumes one purchase.
- Risk: two equal returns can come from very different chances of loss.
How this calculator works
Return on investment explained: ROI, annualised ROI and their limits. How ROI is calculated with income and costs included, why a total return must be annualised before you compare it, and two worked examples with the arithmetic.
This calculator is for general information only and is not financial advice. Results are estimates based on the figures you enter and the stated formula; lenders and providers may round or calculate differently. Check any decision with the institution involved or a qualified adviser.