ROI Calculator
Free ROI Calculator. Calculate Return on Investment (ROI), investment gain, ROI percentage, and annualized return instantly.
What does this ROI Calculator do?
Return on Investment (ROI) measures how much an investment has gained or lost relative to what you put in. This calculator computes both your total ROI over the entire holding period, and your annualized ROI — the equivalent yearly rate, useful for comparing investments held for different lengths of time.
The formulas
Total ROI (%) = ((Final Value − Initial Value) ÷ Initial Value) × 100
Annualized ROI (%) = ((Final Value ÷ Initial Value)^(1/years) − 1) × 100
Step-by-step example
You invested ₹50,000 and it's now worth ₹68,000 after 2 years. Total ROI = ((68,000 − 50,000) ÷ 50,000) × 100 = 36%. Annualized ROI = ((68,000 ÷ 50,000)^(1/2) − 1) × 100 ≈ 16.6% per year — a more useful figure if you want to compare this investment to something like a fixed deposit's yearly rate.
Tips & common mistakes
- Comparing two investments by total ROI alone can be misleading if they were held for different lengths of time — always check annualized ROI for a fair comparison.
- ROI as calculated here doesn't account for taxes, fees, or inflation — for a fuller picture, subtract those out separately.
- A negative ROI simply means the final value was lower than the initial investment — the formula handles this correctly and will show a negative percentage.
Why annualized ROI is the fairer comparison metric
Imagine Investment A returns 20% total over 1 year, and Investment B returns 40% total over 5 years. At a glance, B looks like the bigger win — but annualized, A returns 20% per year while B returns only about 7% per year. Annualizing converts any holding period into an equivalent yearly rate, which is the only fair way to compare investments held for genuinely different lengths of time.
What ROI doesn't capture
ROI as calculated here is a "headline" return figure — it doesn't account for taxes on gains, transaction or brokerage fees, or inflation eroding your money's purchasing power over the holding period. A 36% total ROI over 2 years sounds impressive, but after taxes and a few years of inflation, the real, spendable gain in today's money is meaningfully smaller. For a full financial picture, treat this calculator's output as a starting point, not a final answer.
More tips
- Always use consistent units for "initial" and "final" value — mixing up gross versus net figures, or including/excluding fees inconsistently, is a common source of ROI miscalculation.
- ROI can be applied to almost any investment — stocks, real estate, a business venture, even a home renovation's resale value — as long as you have a clear initial cost and final value.
Frequently asked questions
Total ROI is the overall percentage gain over the whole holding period. Annualized ROI converts that into an equivalent yearly rate, which makes it easier to compare investments held for different lengths of time.