# What is my ROI on this investment?

Computes return on investment (ROI) from the amount invested and the amount returned, and the annualized return over the years held.

- Page: https://www.acalculator.org/finance/roi-calculator
- JSON spec: https://www.acalculator.org/finance/roi-calculator.json
- Version: 796b5e456838

## Default answer

Example with the default inputs (Amount invested $10,000.00, Amount returned $12,500.00, Years held 3): Investing $10,000.00 and getting back $12,500.00 is a return on investment of 25% ($2,500.00).

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| invested | Amount invested | Everything you put in: the price paid plus fees and commissions. |
| returned | Amount returned | Everything you got back: the sale value after selling costs, plus dividends or other income. |
| years | Years held | How long the money was invested, in years (1.5 is a year and a half). Leave empty to skip the annualized return. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| roi | Return on investment | The gain as a percent of the amount invested: (returned − invested) ÷ invested × 100. |
| gain | Gain | The amount returned minus the amount invested. Negative for a loss. |
| annualized | Annualized return | The yearly rate that grows the investment to the amount returned: (returned ÷ invested)^(1 ÷ years) − 1. |

## Method

ROI = (returned − invested) ÷ invested × 100; annualized return = ((returned ÷ invested)^(1 ÷ years) − 1) × 100.

## Assumptions

- The amount invested includes fees and commissions; the amount returned includes income received (dividends, interest, rent) and is after selling costs.
- The annualized return assumes one amount invested at the start and one amount returned at the end, compounding once a year. For money added or taken out along the way, use an internal rate of return instead.
- Tax and inflation are not included.

## Worked examples

1. invested = $2,020.00, returned = $2,540.00, years = 3 gives roi = 25.7%, gain = $520.00. Source: FINRA, Calculating Your Investment Returns: a total return of about $520 or 25.7 percent (rounded, hence the tolerance); 520 ÷ 2,020 = 25.74%.
2. invested = $2,020.00, returned = $2,540.00, years = 3 gives roi = 25.742574%, annualized = 7.934624%. Source: hand calculation in content.mdx: (2,540 ÷ 2,020)^(1/3) − 1 = 7.93%.
3. invested = $10,000.00, returned = $15,000.00, years = 5 gives roi = 50%, gain = $5,000.00, annualized = 8.447177%. Source: hand calculation in content.mdx: 5,000 ÷ 10,000 = 50%; 1.5^(1/5) − 1 = 8.45%.
4. invested = $5,000.00, returned = $4,000.00 gives roi = -20%, gain = -$1,000.00. Source: hand calculation in content.mdx: a loss: (4,000 − 5,000) ÷ 5,000 = −20%.
5. invested = $1,000.00, returned = $2,000.00, years = 7 gives roi = 100%, annualized = 10.408951%. Source: hand calculation in content.mdx: money that doubles in 7 years: 2^(1/7) − 1 = 10.41% a year.

## FAQ

### How do I calculate ROI?

Subtract the amount invested from the amount returned, divide by the amount invested, and multiply by 100. Investing $10,000 and getting back $15,000 is a gain of $5,000 and an ROI of 5,000 ÷ 10,000 × 100 = 50%.

### What should I count as invested and returned?

Count everything. Invested is the price plus fees and commissions. Returned is what you got on sale, after selling costs, plus dividends, interest or rent received. FINRA's example: 100 shares at $20 with $10 commissions each way, sold at $24 with $140 of dividends: $2,020 in, $2,540 back, a $520 gain or 25.7%.

### What is annualized return?

The yearly rate that would grow your money to the same result: (returned ÷ invested)^(1 ÷ years) − 1. A 50% gain over 5 years is 1.5^(1/5) − 1 = 8.45% a year. It lets you compare investments held for different lengths of time.

### Why not just divide the ROI by the years?

Because returns compound. Dividing 25.7% by 3 years gives 8.6% a year, but 8.6% a year for 3 years would grow the money by 28%. The annualized return that gives 25.7% over 3 years is 7.9%.

### Can ROI be negative?

Yes. If you got back less than you put in, the gain and the ROI are negative. Investing $5,000 and getting back $4,000 is an ROI of −20%.

### When should I use IRR or NPV instead?

ROI and annualized return assume one amount in at the start and one amount out at the end. When money goes in or comes out at several times, use the internal rate of return (IRR) or the net present value (NPV), which account for when each amount happens.

## Sources

- FINRA, Calculating Your Investment Returns (count fees, commissions and dividends; the $520, 25.7% example over three years; annualized return versus a simple average). https://www.finra.org/investors/insights/investment-returns
- Hand derivation of the annualized return from invested × (1 + a)^years = returned (shown in full below).