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ROI Calculator
Calculate your Return on Investment (ROI) percentage and profit to evaluate investment efficiency.
ROI: Did You Make Money or Not?
ROI (Return on Investment) is the simplest way to answer: "Was this worth it?" Spent $10k, got back $12k? 20% ROI. Spent $10k, got back $8k? -20% ROI. You lost money.
That's it. That's the whole concept.
💡 Real Talk from David Chen, CFA
Most people compare absolute dollars, not percentages. "I made $500!" Cool, but if you invested $50k, that's 1% ROI. You would've made more in a savings account. Always think in percentages.
Real Examples
Stock trade: Bought 10 shares at $50 ($500 total), sold at $75 ($750 total). ROI = 50%. Nice win.
Rental property: Bought for $200k, sold 5 years later for $250k. ROI = 25%. But that's over 5 years = ~5%/year. Kinda meh.
Side business: Spent $3k on equipment, made $8k in revenue. ROI = 167%. Keep doing that.
Education: $50k MBA, salary went from $60k to $90k. ROI depends on how many years you work at that higher salary. Break-even in ~2 years.
⚠️ Common Mistake: Sunk Cost Fallacy
Invested $5k in a stock, it's now worth $2k. "I can't sell, I'll lose $3k!" You already lost it. The question is: would you buy this stock today at $2k? If not, sell it. Past decisions don't matter.
What's a "Good" ROI?
Depends on risk and time:
- Savings account: ~4-5% (2025). Zero risk.
- S&P 500: ~10% average annually. Medium risk.
- Real estate: ~8-12% if you're good at it. High effort.
- Your own business: 100%+ possible. Also 100% risk of losing everything.
20% ROI on a sketchy crypto coin? Cool. Could've also gone to zero overnight.
ROI Doesn't Tell You Everything
It ignores time. 50% ROI in 1 year? Amazing. 50% ROI over 10 years? You averaged 5%/year. Not amazing.
It also ignores risk. Vegas roulette has a -5.26% ROI, but idiots still play because "I might win big!" Expected value matters more than best-case scenarios.
The Formula (If You Care)
ROI = (Gain - Cost) / Cost × 100
Or just use the calculator. That's why it exists.
Reviewed by David Chen, CFA
Chartered Financial Analyst
David helps investors focus on percentages, not just dollar amounts.
Frequently Asked Questions
What is ROI and how is it calculated?
ROI (Return on Investment) measures the profitability of an investment. The formula is: ROI = (Gain - Cost) / Cost × 100. For example, if you invest $1,000 and get back $1,200, your ROI is 20%.
What is a good ROI percentage?
It depends on the investment type and time frame. Savings accounts offer ~4-5% (2025), S&P 500 averages ~10% annually, real estate typically yields 8-12%, and successful businesses can achieve 100%+ ROI. Higher returns usually come with higher risk.
What's the difference between ROI and profit?
Profit is the absolute dollar amount you gained (Gain - Cost), while ROI is the percentage return relative to your initial investment. A $500 profit on a $1,000 investment (50% ROI) is better than a $500 profit on a $10,000 investment (5% ROI).