ROI on $1 invested, $15 returned
Return on investment and annualized return for $1 invested, $15 returned. Adjust any field below, including the holding period, to try your own numbers.
Total ROI
1400.0%
Annualized ROI
71.9%
Net Gain
$14.00
Example
Investing $1.00 and having it grow to $15.00 after 5 years is a 1400.0% total return — equivalent to about 71.9% per year on an annualized basis.
Final value split between what you put in and what you gained
- Initial Investment: $1.00
- Net Gain: $14.00
What is an ROI Calculator?
An ROI (return on investment) calculator measures how profitable an investment was, relative to what it cost. It's one of the most widely used metrics in finance and business precisely because it's simple: it applies equally well to stocks, real estate, a small business, or any other venture where money goes in and (hopefully) more money comes out.
This calculator also computes the annualized ROI — the total return expressed as an equivalent yearly rate — which fixes ROI's biggest weakness on its own: a raw ROI percentage says nothing about how long it took to earn, so two investments with identical ROI can be very different deals if one took 1 year and the other took 20.
Annualized ROI by Holding Period for a 1400.0% Total Return
This table holds the total return fixed at 1400.0% and shows how the annualized rate changes depending on how long it took to earn — the same total gain is a very different result over 1 year versus 30 years.
| Holding Period | Annualized ROI |
|---|---|
| 1 yrs | 1400.00% |
| 2 yrs | 287.30% |
| 3 yrs | 146.62% |
| 5 yrs (current) | 71.88% |
| 10 yrs | 31.10% |
| 15 yrs | 19.79% |
| 20 yrs | 14.50% |
| 30 yrs | 9.45% |
ROI and Annualized ROI Formulas
Why the Holding Period Matters So Much
The single biggest weakness of raw ROI is that it has no built-in timeframe. A 40% ROI sounds identical whether it took 6 months or 15 years, but those are wildly different outcomes — the first is an exceptional result, the second is barely better than a savings account. Annualized ROI fixes this by converting the total return into an equivalent yearly rate, which is the only fair way to compare two investments held for different lengths of time.
What Counts as "Cost" and "Gain"?
ROI seems simple, but investors often define cost and gain differently, which makes ROI figures hard to compare across asset types. A stock investor might include brokerage fees in the cost; a real estate investor might include renovation costs, closing costs, and holding costs (property tax, insurance) in addition to the purchase price, and might or might not subtract selling costs from the final value. Always check what's included before comparing two ROI figures from different sources.
What ROI Doesn't Tell You
ROI is a good first screen but ignores risk entirely — a 20% ROI from a volatile speculative bet and a 20% ROI from a stable, low-risk investment are treated identically by the formula, even though most investors would value them very differently. It also doesn't account for the time value of money the way metrics like Net Present Value (NPV) or Internal Rate of Return (IRR) do, and it doesn't capture cash flow timing for investments with cash flows spread across the holding period. For real estate specifically, cap rate (net operating income divided by property value) is often used alongside ROI since it isolates the property's income-generating performance from financing decisions. Use ROI to quickly compare options, but lean on these other metrics for a more complete picture before committing real money.
Example — Your Current Inputs
Investing $1.00 and having it grow to $15.00 after 5 years is a 1400.0% total return — equivalent to about 71.9% per year on an annualized basis.
Additional Example — Bob's Sheep Farm
Bob invests $50,000 to start a small sheep farming operation. After selling the wool and lambs, the operation generates $70,000 in total proceeds — a $20,000 profit. ROI is $20,000 ÷ $50,000 = 40%. On its own, that 40% figure looks great, but it says nothing about whether it took 8 months or 8 years to earn — which is exactly why annualized ROI and a defined holding period matter before comparing this to any other investment opportunity.
About These Parameters
- Initial Investment
- The total amount you put in — the purchase price of an asset, the capital invested in a business, or the cost basis of any venture. For a more accurate ROI, include any fees or costs required to make the investment (brokerage fees, closing costs, etc.).
- Final Value (Amount Returned)
- What the investment is worth today, or what you actually received when you sold or closed it out. If you've received cash distributions along the way (dividends, rental income), add those to the final sale value for a complete picture of total return.
- Investment Length (Years)
- How long you held the investment, in years — fractional values like 2.5 are fine. This is only used to compute the annualized ROI; it has no effect on the total ROI percentage itself.
Frequently Asked Questions
What's a "good" ROI?
It depends entirely on the holding period, the asset class, and the risk involved. A 10% total ROI over 1 year is excellent for many asset classes; the same 10% over 10 years is mediocre — it's only about 1% annualized, less than many savings accounts. Always compare annualized ROI, and compare against similarly risky alternatives, not a single universal benchmark.
Why is my annualized ROI so much lower than my total ROI?
Because annualizing spreads the total gain across every year you held the investment, using compound growth math rather than simple division. A 100% total return over 10 years annualizes to about 7.2% per year, not 10% — the difference comes from compounding, the same effect that makes long-term investment growth faster than flat-rate math would suggest.
Does this ROI calculator account for taxes or inflation?
No — this is a nominal ROI calculator based only on the dollar amounts you enter. Capital gains taxes on the profit and inflation eating into purchasing power both reduce your real, after-tax return, and neither is reflected in the figures above.
Can ROI be negative?
Yes — if the final value is lower than the initial investment, net gain is negative and so is ROI, meaning you lost money overall. The lowest possible ROI is -100%, which happens when the investment's final value drops to zero.