ROI Calculator — Return on Investment

ROI is a financial metric used to evaluate the efficiency of an investment. It measures the percentage return relative to the cost of the investment. The formula is: ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. A positive ROI means you made a profit; negative means a loss.

A good ROI depends on the investment type and risk level. For stocks, the historical average annual return is about 10%. For real estate, 8-12% is considered good. For business investments, 15-30% is often targeted. Generally, any ROI that beats inflation (2-3%) and the risk-free rate (4-5%) is considered acceptable.

ROI does not account for the time period of the investment. A 50% ROI over 10 years is very different from 50% over 1 year. For time-adjusted returns, consider Annualized ROI or IRR (Internal Rate of Return). ROI also does not account for risk, liquidity, or opportunity cost.

Annualized ROI = ((1 + ROI)^(1/years) - 1) × 100. For example, if your ROI is 50% over 3 years, the annualized ROI is ((1.5)^(1/3) - 1) × 100 = 14.47% per year. This allows you to compare investments of different durations.