How the rOI Calculator works
ROI compares everything you got back, the ending value plus any income along the way, to what you put in. The annualized figure converts that total return into a per-year rate so you can compare investments held for different lengths of time.
ROI = (Value + Income − Cost) ÷ Cost × 100 | Annualized = (Total ÷ Cost)1/years − 1
Example: $10,000 that grows to $14,000 and pays $500 of income over 3 years is a 45% ROI, which annualizes to about 13.2% per year.
Frequently asked questions
What is a good ROI?
It depends on the risk. Stock markets average about 10% per year, so a long-term project earning less than that carries an opportunity cost. Higher-risk ventures need higher ROI to be worth it.
Why use annualized return instead of total ROI?
A 50% ROI is excellent over 2 years and mediocre over 15. Annualizing puts every investment on the same per-year scale.
Does ROI include taxes and fees?
Only if you include them. For a true picture, subtract transaction costs from the ending value and use after-tax income.