ROI Calculator

Return on investment is the simplest way to compare what you got back from something against what you put into it. The ROI calculator shows you that percentage, along with the net profit behind it, so you can see whether a headline return figure is actually meaningful.

The basic formula is (gain - cost) divided by cost, expressed as a percentage. Enter your total investment and the total value you received, and the result is the return expressed against your original outlay. The net profit figure matters just as much: a 50% return on $1,000 is $500, while the same 50% on $100,000 is $50,000. Percentages without the underlying numbers can be misleading.

For anything that generates income over time, switch to the recurring income mode. Enter your upfront investment, the monthly income it produces, the monthly running costs, and the time period. The calculator then totals the income and costs across the whole period and works out the return on everything you put in, not just the initial outlay. This is the right model for equipment, a rental property, or a side business.

The annualised return (CAGR) figure is what makes results comparable across different time periods. A 40% return over two years is a very different proposition from 40% over ten. CAGR reduces both to a single yearly rate, which is the number to use when you are deciding between investments with different horizons.

It is also worth thinking about what ROI does not capture. It ignores the time value of money entirely, which is why the annualised figure matters. It ignores taxes, fees, and transaction costs, all of which quietly reduce what actually reaches you. And it says nothing about risk: a guaranteed 10% and a speculative 10% produce the same ROI but are very different propositions.

For a business rather than an investment, the break-even calculator is usually the more useful companion, since it shows the volume you need rather than the return on what you have already put in.