Reckonary / Finance / ROI calculator
Return on investment
ROI shows profit as a share of what you put in, so you can compare it against other investments.
Return on investment, or ROI, measures how much you gained or lost relative to what you put in. Enter the amount invested and the amount returned, and this calculator shows the ROI as a percentage plus the profit in dollars. A positive figure is a gain; a negative one is a loss.
ROI is the profit divided by the amount invested, written as a percentage. Put in $1,000 and get back $1,500 and your profit is $500, so the ROI is 50%. The percentage is what makes ROI useful: it lets you compare deals of very different sizes on equal footing. A $200 gain on $1,000 and a $2,000 gain on $10,000 are both a 20% return, even though one is ten times the dollars. Without the percentage, you'd have no fair way to line them up.
This is the single most important thing to understand about ROI, and it's the mistake that catches almost everyone. ROI tells you how much you made but says nothing about how long it took. A 50% return is a 50% return whether you got it in two years or in five — but those are wildly different investments.
To compare fairly, you have to convert ROI into a yearly rate, the way a savings account or a stock index is usually quoted. That yearly figure is the compound annual growth rate, or CAGR. Take the same 50% total return:
Same 50% on the sticker, but the two-year version compounds nearly three times faster each year. If you only looked at the raw ROI, they'd seem identical. This is why a private deal advertising "200% returns" can be unremarkable once you learn it took fifteen years to get there.
The shortcut most people reach for — dividing ROI by the number of years — is wrong, because it ignores compounding. A 50% return over three years is not 50 ÷ 3 = 16.7% a year. The correct method raises one plus the ROI to the power of one over the years, then subtracts one:
The gap between the quick division and the real rate widens the longer you hold, so the shortcut flatters long-held investments and understates short ones. When the time periods differ, always annualize before you compare.
For an honest number, the amount returned should be what you actually keep after fees, commissions, and taxes — the net return. Using the gross figure quietly inflates your ROI. If you paid a 1% buying fee and a 1% selling fee, that $1,500 return on a $1,000 investment is closer to $1,475 in your pocket, which is a 47.5% ROI rather than a tidy 50%. Subtract every cost of getting in and out before you read the result, and the number you get will survive contact with reality.
What counts as a good ROI?
There is no universal number — it depends on the risk and the alternatives. A return that beats what you could earn safely elsewhere, after fees and taxes, is the practical bar. Higher returns usually come with higher risk.
Can ROI be more than 100%?
Yes. If you get back more than double what you put in, ROI passes 100%. Put in $1,000 and receive $2,500 and the ROI is 150%.
What's the difference between ROI and ROE?
ROI measures the return on the total amount you invested. Return on equity (ROE) measures a company's profit against shareholder equity. They answer different questions, so don't treat the two figures as interchangeable.
How do I turn ROI into a yearly rate?
Raise one plus the ROI to the power of one over the number of years, then subtract one. A 50% ROI over three years works out to roughly 14.5% per year, not 50% divided by three.
Last reviewed June 2026. This tool is for education, not financial advice.