How to use
- Enter the amount invested, including fees and other costs.
- Enter the amount returned: the sale price or current value, plus any income such as dividends or rent.
- Optional: add how long you held it to see the annualized ROI.
ROI formula
ROI = (amount returned − amount invested) ÷ amount invested × 100
Annualized ROI = (1 + ROI)^(1 ÷ years) − 1
ROI is the total return over the whole period. Annualized ROI is the steady yearly rate that compounds to the same total.
Examples
$10,000 invested, $15,000 back after 3 years:
- ROI = (15,000 − 10,000) ÷ 10,000 = 50%
- Annualized = 1.5^(1 ÷ 3) − 1 = 14.47% a year
A share with a dividend (from OpenStax’s finance textbook): bought at $128.74, sold at $176.53, with $2.68 of dividends.
- ROI = (176.53 + 2.68 − 128.74) ÷ 128.74 = 39.20%
Why the holding period matters
The same total ROI means very different yearly returns depending on how long it took:
| Total ROI | Over 2 years | Over 5 years | Over 10 years |
|---|---|---|---|
| 25% | 11.8% a year | 4.56% a year | 2.26% a year |
| 50% | 22.47% a year | 8.45% a year | 4.14% a year |
| 100% | 41.42% a year | 14.87% a year | 7.18% a year |
| 200% | 73.21% a year | 24.57% a year | 11.61% a year |
Dividing ROI by the years overstates the yearly rate: 50% ÷ 3 is 16.67%, but the true figure is 14.47%.
ROI, annualized ROI and CAGR
- ROI answers “how much did I make in total?”.
- Annualized ROI answers “what is that per year?”. It equals the investment’s CAGR.
- To work backwards from a growth rate to an end value, use the CAGR calculator.
Short holding periods
Annualizing a period under a year assumes the same return would repeat for the rest of the year. A 14.62% gain in three months becomes about 72.58% a year, which rarely happens in practice.
For short trades, the plain ROI is usually the more honest figure.