ROI Calculator
Return on investment: profit, ROI percentage and how long the money is tied up.
Return on investment answers one question: for every unit of money put in, how much came back, and how much of it is profit?
Enter what you invested, what it returned and how many months the money was committed, and this calculator gives the profit, the ROI percentage and the annualised return that makes two opportunities comparable.
At a glance
- What you enter
- Initial investment, Final value received, Months the money was committed
- What you get
- Profit, Return on investment, Annualised return
- Formula shown
- Yes - every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only - always verify with a professional or official source before acting on them.
How to use the ROI Calculator
- 1 Enter Initial investment
- 2 Enter Final value received
- 3 Enter Months the money was committed (months)
- 4 Press Calculate. You get Profit, Return on investment, Annualised return, and every intermediate step stays visible under “How is this calculated?”
- 5 Change one number at a time to see what moves the result - that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
A $10,000 investment sold for $14,000 after two years
Money put into one position at $10,000 and sold for $14,000 two years later.
You enter
- Initial investment
- $10,000.00
- Final value received
- $14,000.00
- Months the money was committed
- 24 months
You get
- Profit
- $4,000.00
- Return on investment
- 40.0%
- Annualised return
- 18.3%
Profit is $4,000, which is 40% of the $10,000 you put in, and the money multiple is 1.4x. Spread across the 24 months the money was committed, that is about $167 of profit a month. Because the wait was two years, the annualised return is 1.4 ^ (12 / 24) - 1, or about 18.3% a year, which is the figure to compare against any other use of the same $10,000.
A $5,000 equipment purchase that returned $5,750 in six months
A short project funded up front and paid back half a year later.
You enter
- Initial investment
- $5,000.00
- Final value received
- $5,750.00
- Months the money was committed
- 6 months
You get
- Profit
- $750.00
- Return on investment
- 15.0%
- Annualised return
- 32.3%
Profit is $750, or 15% of the $5,000, and the money multiple is 1.15x. The annualised return is 1.15 ^ (12 / 6) - 1, which is about 32.3% a year, a much bigger figure than the 18.3% earned by the two year example even though the total return is smaller. The profit per month step, $125, shows how quickly the money came back; whether you can repeat the deal is the part the maths cannot tell you.
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Frequently asked questions
Is ROI the same as profit?
No. Profit is an amount of money: what came back minus what you put in. ROI is that profit divided by the amount you invested and shown as a percentage, so it describes how hard the money worked rather than how much of it there was.
A $2,000 profit is a 20% return on a $10,000 investment but only a 4% return on $50,000. That is why this calculator shows the profit, the ROI percentage and the money multiple together: the same deal can look large in dollars and modest as a percentage.
Why does the annualised return matter more than the total return?
The total return does not know how long your money was tied up. The calculator converts it to a yearly rate with (final value / initial investment) ^ (12 / months) - 1. A 40% total return over 24 months works out at about 18.3% a year, while the same 40% over 6 months works out at about 96% a year.
That conversion assumes the money grew at a steady compounded rate for the whole period, which is a smoothing assumption and not a description of what happened month by month. Use it to put opportunities of different lengths on the same footing, not as a forecast of the next twelve months.
Does ROI take risk, tax or the value of my own time into account?
No. The calculation uses only the two amounts you type in, so it has no view on how likely the outcome was, and there is no tax line. If the final value you entered is before fees, platform charges or tax on the gain, the ROI shown is a gross figure and what you keep will be lower.
Your own unpaid hours are not in the model either. If a project took you 200 hours, the honest version is to add a notional hourly cost to the initial investment, or subtract it from the final value, and then read the ROI again. On small projects that single adjustment can turn a positive return into a negative one.
How do I compare this return with a savings account or an index fund?
Compare annualised figures, not totals. A return of 25% over nine months is roughly 34.7% a year, and that is the number to hold against the yearly rate of the alternative. You can check the alternative with the compound interest calculator to see what the same money would have become with no work and no risk.
A higher annualised return is not automatically the better choice, because ROI ignores risk entirely. The question to ask is whether the extra return over the passive option pays you enough for the chance of losing part of the capital, and for the hours you spend managing it.
Terms used here
Short, plain-language definitions of the words this calculator uses.