Return on Investment (ROI)
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Net profit: £0
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ROI Calculator
Calculate return on investment as a percentage and see your annualised ROI.
Currency
£
Return as:
£
yrs
Used to calculate annualised ROI
Initial Investment
£0
Final Value
£0
Annualised ROI
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Return Multiple
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ROI Visualisation
Initial cost
Final value
ROI at Different Holding Periods
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How to Calculate and Interpret Return on Investment
What is ROI?
Return on Investment (ROI) measures the profitability of an investment relative to its cost. Formula: ROI = (Net Profit ÷ Initial Cost) × 100. It's one of the most widely used metrics for comparing different investments.
Annualised ROI
Simple ROI doesn't account for time. Annualised ROI (CAGR) normalises returns across different holding periods, letting you compare a 50% return over 2 years against a 100% return over 5 years on a fair basis. The average return calculator computes CAGR from a series of annual returns.
Return multiple
The return multiple (or MOIC — Multiple on Invested Capital) shows how many times your initial investment you received back. A 2.0× means you doubled your money; a 0.8× means you lost 20%. To model how long it takes to double your money at a given rate, try the compound interest calculator.
Limitations of ROI
ROI doesn't account for inflation, taxes, or opportunity cost. A 10% ROI over 10 years is far less impressive than 10% over 1 year. Always use annualised ROI (CAGR) when comparing investments held for different durations. For projecting future portfolio value from a starting balance, try the investment calculator.
Worked example
Invest £8,000 and sell for £11,500 after 4 years: net profit = £3,500, ROI = (3,500 ÷ 8,000) × 100 = 43.75%. Annualised ROI (CAGR) = (11,500 ÷ 8,000)^(1/4) − 1 = 9.46% per year — equivalent to earning 9.46% compounded annually for four consecutive years.
Frequently Asked Questions
How do I calculate ROI?
ROI = (Net Profit ÷ Initial Cost) × 100. Net profit is the final value minus the initial investment. For example, investing £1,000 and receiving £1,300 gives a net profit of £300 and an ROI of 30%. Enter your values in the calculator above to get the result including annualised ROI.
What is annualised ROI and why does it matter?
Annualised ROI (CAGR) normalises returns across different time periods so investments can be compared fairly. A 50% return over 2 years and a 100% return over 5 years can't be compared directly — annualising both reveals the true per-year performance. Formula: (1 + ROI)^(1/years) − 1.
What is a good ROI?
What counts as a 'good' ROI depends on the asset class, time period, and risk. Equities historically return about 10% per year; real estate 5–10%; savings accounts 2–5% in normal rate environments. The key comparison is whether ROI beats inflation and the return available from lower-risk alternatives.
What is a return multiple (MOIC)?
A return multiple (MOIC — Multiple on Invested Capital) shows how many times your initial investment you received back. A 2.0× means you doubled your money; a 0.8× means you lost 20%. Return multiples are common in private equity and venture capital, where investments are held years before an exit.
Evidence & Methodology
How This Page Is Grounded
Method
Calculates total return from gain or loss divided by initial cost and annualises it when a holding period is supplied.
Important limitation: Does not automatically adjust for cash-flow timing, tax, fees, inflation or investment risk.
Primary Sources
- Annual return Investor.gov — U.S. Securities and Exchange Commission
Quality Checks
Positive, negative, zero-cost validation and multi-year examples are checked.
See how sources are selected and corrections are handled in our Editorial & Calculation Methodology, and which automated checks this page has to pass in How We Test.