ROI calculator
ROI is a simple division that gets misused constantly: 50% in six months and 50% in ten years give the same figure. So here it comes annualised too.
Your figures
Result
- What you put in$5,00062.5%
- Gain$3,00037.5%
- Gain
- $3,000.00
- Annualised ROI
- 16.96%
The deal in three lines
| Item | Amount |
|---|---|
| What you put in | $5,000.00 |
| Gain | $3,000.00 |
| What you get back | $8,000.00 |
What we assume
- The return is the total amount recovered, not just the gain.
- Annualised ROI uses compound growth, the same as CAGR.
- No tax, fees or inflation are deducted.
- ROI does not measure risk, and two deals with the same ROI can be nothing alike.
How it is calculated
The formula is one subtraction and one division:
ROI = (amount back − amount invested) / amount invested × 100
Put in £5,000 and get back £8,000: you gained £3,000, so the ROI is 60%.
The mistake of ignoring time
60% sounds good until you ask how long it took. Over six months it is excellent; over twenty years it is worse than a savings account. Plain ROI has no time inside it, which is exactly why it is so easy to dress up in a presentation.
Annualised ROI fixes that by spreading the gain the compound way:
annual ROI = (amount back / amount invested)^(1 / years) − 1
That 60% over 3 years is 16.96% a year. The same 60% over ten years drops to 4.81%.
The amount trap
The most common mix-up is entering only the gain under "what you get back". Put in 5,000 and enter 3,000 as the return and ROI comes out at −40%, because the maths reads it as getting back less than you put in. This field wants the full final amount.
What ROI does not tell you
Anything about risk. A guaranteed deposit and a bet that came off can share an ROI, and they are not the same decision. Nor does it say anything about liquidity: £20,000 locked in a flat for eight years is not £20,000 in a fund you can sell on Tuesday.
It is a measure of outcome, not of quality. It compares what happened; it does not choose what happens next.
An example
You invest £5,000 and after 3 years get back £8,000. The gain is £3,000, the ROI is 60% and the annualised ROI is 16.96%.
Frequently asked questions
What is the difference between ROI and CAGR?
ROI measures the total outcome without looking at time; CAGR is the annual rate. In fact the annualised ROI shown here and CAGR are the very same formula: put the same numbers into both calculators and you get the same figure.
Can ROI go above 100%?
Yes, as soon as you get back more than double what you put in. A 100% ROI means you doubled; 200% means you tripled. The floor is −100%, which is losing everything.
Do costs go into the investment or come off the return?
Mathematically it makes no difference for up-front costs, but it is cleaner to add them to the investment: purchase fees, legal costs, renovations. Recurring costs are better subtracted from the return, which is where they happen.
Does it work for marketing campaigns?
Yes, and it is one of the most common uses: the investment is the budget and the return is the margin generated. Just be careful using revenue instead of margin, or you get a spectacular ROI that corresponds to no real money.
Keep calculating
All tools →- Compound interest calculator Work out how much your savings will grow with compound interest and regular contributions, and how much of that total came from interest rather than from you.
- How much to save each month Say what you want and when. We work out the monthly amount, and how much of it the return contributes instead of you.
- Rental yield calculator Gross yield is the number in the advert. Net yield, after costs and empty months, is the one you actually get.
- Rule of 72 calculator The mental shortcut everyone knows, next to the exact answer. And how much the shortcut is off by at your rate.
- Simple interest calculator Simple interest always pays on the original capital and never on what you have already earned. Here it sits next to compound, which is where the difference shows.
- CAGR calculator Two figures and a term give the constant rate that would have taken the first to the second. It is the honest way to compare investments of different lengths.
Updated on 2026-09-11. Calculations run in your browser; nothing you type is sent to a server.