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Calculate return on investment percentage and annualized returns
A $10,000 stock investment that grew to $18,000 over 5 years has an 80% total ROI and a 12.5% annualized return. Profit: $8,000.
A $200,000 property that appreciated to $280,000 over 7 years has a 40% total ROI and a 4.9% annualized return. Profit: $80,000.
A $50,000 business investment returning $75,000 over 2 years has a 50% total ROI and a 22.5% annualized return. Profit: $25,000.
Return on Investment (ROI) measures the profitability of an investment as a percentage. It is calculated as (Gain - Cost) / Cost x 100. A positive ROI means you made money; a negative ROI means you lost money.
A 'good' ROI depends on the investment type and risk. The S&P 500 has historically returned about 10% annually. Real estate typically returns 8-12%. A savings account might yield 4-5%. Higher-risk investments should deliver higher returns to compensate for the risk.
Annualized ROI normalizes returns to a per-year basis, making it possible to compare investments with different time horizons. A 50% return over 10 years (4.1% annualized) is very different from 50% over 2 years (22.5% annualized).