Return on investment in one line: what you got back versus what you put in. Add a time period to see the annualized rate — the only fair way to compare investments of different lengths.
Return on investment (ROI) measures how much you gained relative to what you put in. It is the universal yardstick for comparing the profitability of almost anything — a stock, a marketing campaign, a piece of equipment, a hire, a course. The formula is one line:
ROI = (amount returned − amount invested) ÷ amount invested × 100.
Put in $1,000, get back $1,300, and your ROI is (1,300 − 1,000) / 1,000 × 100 = 30%. The dollar version, net profit, is simply returned minus invested — $300 here. ROI expresses that as a percentage so a $300 gain on $1,000 and a $30,000 gain on $100,000 can be compared on equal footing: both are 30%.
A frequent slip is entering only the profit in the "returned" box. The formula expects the total value you received — your original capital plus the gain. If you invested $1,000 and made $300, the amount returned is $1,300, not $300. Entering $300 would compute a −70% ROI, as if you had lost most of your money. The calculator above follows the standard convention: invested in, total value out.
Plain ROI has a blind spot: it ignores time. A 50% return is spectacular in one year and disappointing over ten. To compare investments of different durations fairly, you annualize:
Annualized ROI = (amount returned ÷ amount invested)^(1 ÷ years) − 1.
A 30% total return over three years works out to about 9.1% per year — because gains compound, not because 30 ÷ 3 = 10. The compounding is why the annualized figure is slightly below the naive average. Enter a time period above and the calculator returns the annualized rate, which is the number you should use whenever you compare opportunities that play out over different horizons.
| Investment type | Typical annual return |
|---|---|
| High-yield savings | 3–5% |
| S&P 500 (long-run average) | ~10% |
| Real estate (incl. rent) | 8–12% |
| Marketing campaigns | Often 200–800% (but short-lived) |
| Venture / startups | Wide range — many −100%, a few 1000%+ |
These are orientation, not promises. The right benchmark for any decision is the realistic return on the next-best use of the same money at a comparable risk level.
ROI is a clean headline but it hides several things. It ignores the timing of cash flows within the period — money back sooner is worth more, which is why finance teams also use IRR and NPV. It says nothing about risk or variance. And it is only as honest as your inputs: if you understate the true cost (forgetting fees, your own time, or opportunity cost) the ROI is flattering but false. For business decisions, count every cost on the "invested" side.
Marketing ROI deserves its own treatment because "amount returned" should be gross profit from the campaign, not raw revenue — a 400% revenue ROI can be a loss after margin and fulfilment. For the full marketing picture (CAC, ROAS, LTV and payback together) use the dedicated marketing ROI calculator, and check the underlying acquisition cost and lifetime value that determine whether the return is sustainable or a one-off.
ROI = (returned − invested) ÷ invested × 100. $1,000 in, $1,300 back = 30%.
(returned ÷ invested)^(1 ÷ years) − 1. A 30% return over 3 years ≈ 9.1% per year.
It depends on risk and horizon. Beat the ~10% long-run stock-market average and your safe alternatives, adjusted for risk.
Total ROI ignores time. Annualizing puts investments of different lengths on a fair per-year basis.