Calculate return on investment as a total percentage and as an annualised rate, so a gain over six months and a gain over six years can be compared honestly. Runs entirely in your browser — your numbers never leave this device.
ROI ignores when the money went in and came out beyond the holding period you enter, and it doesn't subtract taxes, fees or inflation.
Return on investment, in its basic form, is gain divided by cost, expressed as a percentage: put in $10,000 and come out with $13,000, and the ROI is (13,000 − 10,000) / 10,000 = 30%. The calculator shows the gain in money alongside the percentage, because a percentage without the underlying amounts hides the scale — 30% of $100 and 30% of $100,000 are very different events that wear the same headline number.
Total ROI alone cannot compare investments held for different lengths of time, which is why the annualised (compound annual) return matters. Annualising asks: what steady yearly rate would have produced this total result over this holding period? It is the compound growth formula run backwards, and it regularly surprises people: returns do not divide evenly by the years, because compounding is geometric, not arithmetic. The second example works the classic case — a 50% gain over two years — both ways so the difference is unmistakable.
Losses are handled symmetrically and reported as negative returns: an investment that falls from $5,000 to $4,500 has an ROI of −10%. A useful asymmetry is worth seeing in the numbers: after a 10% loss you need an 11.11% gain on the remaining money just to get back to even, and after a 50% loss you need a 100% gain, because the recovery percentage is measured against the reduced amount.
Because returns compound. Dividing 50% by 2 years gives 25%, but growing at 25% a year for 2 years actually produces a 56.25% total (1.25 × 1.25 = 1.5625), overshooting the true result. The annualised formula takes the n-th root instead of dividing, which is why a real 50% two-year gain annualises to 22.47%.
Everything you put in to make the investment: purchase price plus buying fees, commissions and any additional amounts invested along the way. Likewise, the final value should be net of selling costs, and should include income received (such as rent or dividends) if you want a total return. ROI is only as honest as the two numbers fed into it — the calculator's working shows the substitution so omissions are visible.
Yes — it simply means the gain exceeded the original cost. An investment that triples returns (3 − 1) / 1 = 200% total ROI. There is no upper limit on the positive side, while the worst possible ROI is −100%, reached only if the final value is zero.
Risk, timing of cash flows and inflation. Two investments with identical ROI can have wildly different risk and volatility, and plain ROI treats a gain in year one the same as a gain in year five of the same total. ROI also says nothing about purchasing power: a 30% return over a decade of high inflation may be a much smaller real gain, which the annualised figure plus an inflation check can help you judge.
They are cousins: both express a growth result as an effective yearly rate using compounding. APY is defined for interest-bearing accounts with a stated rate and compounding schedule. Annualised return is computed after the fact from an actual start value, end value and holding period, for any kind of investment. The formulas are the same shape; the inputs and the claims behind them differ.
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