Tiny Toolkit

ROI Calculator — Return on Investment Calculator

Calculate total return on investment and annualized ROI for any investment or business decision. Enter your initial investment, final value, and time period in years. Annualized ROI accounts for the time value of money, making it easy to compare investments held for different periods.

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Frequently Asked Questions

What is ROI and how is it calculated?
ROI (Return on Investment) measures the profitability of an investment relative to its cost. It's calculated as: (Final Value − Initial Investment) ÷ Initial Investment × 100. A 35% ROI means you gained $0.35 for every $1 invested.
What is annualized ROI and why does it matter?
Annualized ROI converts total ROI into an equivalent annual rate, making it possible to compare investments held for different time periods. It's calculated as: ((Final Value ÷ Initial Investment) ^ (1 ÷ Years) − 1) × 100. A 35% total ROI over 2 years equals a 16.1% annualized ROI.
Does ROI account for taxes or inflation?
This calculator shows nominal ROI without adjusting for taxes or inflation. Real-world returns are reduced by capital gains taxes and eroded by inflation. To estimate real (inflation-adjusted) ROI, subtract the annual inflation rate from the annualized ROI.
Is annualized ROI the same as CAGR?
Yes. Annualized ROI and CAGR (Compound Annual Growth Rate) use the same formula: ((Final Value ÷ Initial Investment) ^ (1 ÷ Years) − 1) × 100. CAGR is the term more commonly used in investing and finance contexts, while annualized ROI is used in broader business settings.

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ROI is one of the most widely used metrics in business and investing. Here's the formula, how to apply it, and when other metrics give you a clearer picture.

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