ROI Calculator
Calculate return on investment for stocks, real estate, business ventures, and more
Compare your investment performance against the S&P 500 benchmark. Calculate simple ROI or annualized returns for multi-year investments.
Investment Details
Select category for benchmark comparison
Amount you invested initially
Current or exit value
For annualized ROI calculation (optional)
Results
Return on Investment (ROI)
+50.00%
Profitable investment
Net Profit/Loss
+$5,000.00
Annualized ROI
8.45%
Per year average
vs S&P 500 Benchmark (10% avg)
Underperforming-1.55%
1.55% below market average
Investment Growth vs Benchmark
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Important Disclaimer
Not Financial Advice: This calculator provides estimates for educational and informational purposes only.
- Results are based on the information you provide
- Actual results may vary based on individual circumstances
- Consult a qualified professional before making financial decisions
Understanding ROI
Return on Investment (ROI) is a fundamental metric that measures the profitability of an investment relative to its cost. ROI helps you evaluate whether an investment was worthwhile and compare performance across different opportunities.
📊 Simple ROI Formula
ROI = (Final Value - Initial Investment) / Initial Investment × 100 Use for single-period investments or when time is not a factor. Shows total return percentage regardless of duration.
📈 Annualized ROI (CAGR)
CAGR = ((Final / Initial)^(1/years) - 1) × 100 Accounts for time, showing average yearly return over multiple years. Better for comparing investments with different time horizons.
📊 ROI Benchmarks by Industry
Different investment categories have different typical ROI ranges. Compare your returns against these industry benchmarks to evaluate performance:
| Industry / Asset Class | Typical ROI Range | Risk Level | Key Factors |
|---|---|---|---|
📈 Stock Market (S&P 500) Diversified index funds | 8-12% Annualized | Medium | Historical average ~10% annually. Long-term horizon (10+ years) reduces volatility. Dividend reinvestment boosts returns. |
💹 Individual Stocks Single company investments | -100% to +500% Highly variable | High | Wide range based on company performance. Tech growth stocks can exceed 50% annually. Value stocks average 8-15%. |
🏠 Real Estate (Rental) Residential & commercial | 8-15% Total return | Medium | Includes rental income (4-8%) + appreciation (3-7%). Location critical. Property management affects returns. |
🔨 Real Estate (Flipping) Fix & flip | 20-40% Per project | Med-High | Short-term (6-12 months). Renovation costs and market timing critical. Experience reduces risk. |
💼 Small Business Investment Established businesses | 15-30% Target return | Med-High | Active management often required. Industry, location, and execution critical. 5-10 year horizon typical. |
🚀 Startups / Tech Ventures Angel & VC investments | 0-1000%+ Binary outcome | Very High | 90% fail (lose all). Successful exits can return 10-100x. Diversification essential. Illiquid (5-10+ years). |
🏦 Bonds (Corporate/Govt) Fixed income securities | 3-7% Yield to maturity | Low | Predictable income. Government bonds 3-5%, corporate 5-7%. Interest rate risk affects prices. |
🏢 REITs Real estate investment trusts | 8-12% Total return | Medium | Dividend yields 3-5% + appreciation. Liquid like stocks. Diversified real estate exposure without direct ownership. |
₿ Cryptocurrency Bitcoin, Ethereum, etc. | -80% to +500% Extremely volatile | Very High | Speculative asset class. 24/7 trading, high volatility. Only invest what you can afford to lose. Bitcoin long-term avg ~100%+/year. |
👥 Peer-to-Peer Lending P2P loans | 5-10% Net returns | Medium | Returns after defaults. Diversification across 100+ loans recommended. 3-5 year terms typical. |
🥇 Commodities (Gold, Oil, etc.) Physical & futures | 3-8% Long-term avg | Med-High | Inflation hedge. Gold historical ~5%/year. Oil volatile. No cash flow/dividends. Storage costs for physical. |
🎓 Education / Training Skills & certifications | 10-200%+ Career impact | Low-Med | Measured by salary increase. Professional certifications can yield $10k-$50k+ annual raises. In-demand skills (coding, etc.) highest ROI. |
Quick Reference: Popular Investment Classes
Stock Market
8-12%
Historical average annual return. S&P 500 averages ~10% over long term. Individual stocks vary widely.
Real Estate
8-15%
Varies by location, property type, and market conditions. Includes rental income and appreciation.
Business Investment
15-25%+
Higher potential returns but higher risk. Startups and growth businesses often target 25%+ returns.
Important: Past Performance ≠ Future Results
These benchmarks are historical averages and should not be interpreted as guarantees. Actual returns vary based on market conditions, timing, individual skill, and countless other factors. Always consider your risk tolerance, investment timeline, and diversification needs. Higher returns typically come with higher risk.
⏱️ Time-Weighted Return vs. Money-Weighted Return
Understanding the difference between these calculation methods is crucial for accurate performance evaluation.
⏱️ Time-Weighted Return (TWR)
Measures investment performance by eliminating the effects of cash flows (deposits/withdrawals). Shows what a $1 investment would have returned over the period.
Best for:
- Comparing fund managers
- Evaluating portfolio performance
- When you can't control cash flows
- Industry standard for professional managers
Example: Your fund manager's TWR shows they beat the market by 2%, regardless of when you added money.
💰 Money-Weighted Return (MWR/IRR)
Measures YOUR actual dollar return, accounting for when you added or withdrew money. Shows what YOU personally earned on YOUR money.
Best for:
- Your personal returns
- Investments with irregular cash flows
- Real estate with rental income
- When timing of contributions matters
Example: Your MWR might be lower if you invested a lot right before a market crash.
📊 Real-World Example
Scenario: You invest in a mutual fund over 2 years
Year 1
Invest $10,000
Market returns +20%
Value: $12,000
Start Year 2
Add $10,000 more
Total invested: $20,000
Balance: $22,000
End Year 2
Market returns -10%
Total invested: $20,000
Final: $19,800
Results:
Time-Weighted Return:
+3.9%
The fund itself performed well: (1.20 × 0.90)^0.5 - 1 = 3.9% avg per year
Your Money-Weighted Return:
-1.0%
You lost money because you invested heavily right before the crash
✅ Key Insight: The fund manager (TWR) did well, but your timing (MWR) was unlucky. Use TWR to evaluate the manager, MWR to see your personal result.
Frequently Asked Questions
What is a good ROI?
A "good" ROI depends on the investment type and risk level. Generally, 7-10% annually is considered good for stock market investments (matching historical averages). Real estate typically targets 8-12%, while business investments may aim for 15-25%+ to justify higher risk. Always compare ROI against relevant benchmarks for your investment category.
What's the difference between ROI and annualized ROI?
Simple ROI measures total return regardless of time (e.g., "I made 50% over the life of the investment"). Annualized ROI (also called CAGR - Compound Annual Growth Rate) shows the average yearly return, accounting for compounding. For example, a 50% return over 5 years equals about 8.45% annualized. Use annualized ROI to compare investments with different time horizons.
How do I calculate ROI for real estate?
For real estate, include all costs (purchase price, closing costs, renovations, holding costs) as your initial investment. Your final value includes sale price minus selling costs, plus any rental income earned. For rental properties, calculate annual ROI using (Annual Rental Income - Annual Expenses) / Total Investment × 100. Don't forget to account for property appreciation, tax benefits, and mortgage paydown.
Is ROI the same as profit?
No. Profit is the absolute dollar amount you gained or lost (Final Value - Initial Investment). ROI is a percentage that shows your profit relative to your investment, making it easier to compare different-sized investments. A $5,000 profit on a $10,000 investment (50% ROI) is better than a $5,000 profit on a $50,000 investment (10% ROI), even though the profit is the same.
What is ROI vs IRR (Internal Rate of Return)?
ROI is simpler and works well for single-payment investments (invest once, cash out once). IRR is more complex and accounts for timing of multiple cash flows (like a rental property with monthly income). For most personal investments (stocks, real estate flips, business exits), ROI is sufficient. Use IRR for investments with ongoing cash flows where timing matters significantly.
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