ROI Calculator

ROI (Return on Investment) measures the profitability of an investment as a percentage. It is calculated as ((Return - Investment) / Investment) x 100. For example, if you invest $1,000 and receive $1,500 back, your ROI is ((1500 - 1000) / 1000) x 100 = 50%.

Annualized ROI adjusts the return to reflect a yearly rate, making it easier to compare investments held for different time periods. It uses the formula: ((1 + ROI)^(1/years) - 1) x 100. This gives you a consistent annual percentage regardless of how long you held the investment.

A good ROI depends on the type of investment and the level of risk. The S&P 500 has historically returned about 10% annually before inflation. Real estate investments often target 8-12% ROI. Any ROI above the risk-free rate (treasury bonds) can be considered positive, but higher-risk investments should deliver higher returns to be worthwhile.

Basic ROI does not account for the time value of money. A 50% return over 1 year is much better than 50% over 10 years. That is why annualized ROI is useful for comparing investments held for different durations. For a more thorough analysis, consider metrics like Net Present Value (NPV) or Internal Rate of Return (IRR).