ROI Calculator
Return on investment (ROI) measures the gain or loss relative to the original cost. Switch between standard mode (calculate ROI from values) and reverse mode (find the required return for a target ROI).
Calculate ROI
Enter final value OR net profit below — not both.
Related: Investment Return · Annualised Return
How the ROI Calculator works
Return on investment (ROI) is one of the most widely used measures of financial performance. It expresses how much you gained or lost on an investment relative to the amount you put in. The formula is straightforward: divide your net profit by the initial cost and multiply by 100 to get a percentage. This calculator also lets you work in reverse — enter a target ROI to discover the final value you need to reach it.
For UK investors, ROI is useful when comparing property purchases, ISA portfolios, business expenditure, and more. However, basic ROI ignores the time dimension. A 50% ROI over ten years is considerably less impressive than the same return achieved in one year. That is why this calculator also computes annualised ROI: enter the number of years you held the investment, and it applies the compound annual growth rate (CAGR) formula to express your return as an equivalent yearly figure, making fair comparisons across investments of different durations straightforward.
Frequently asked questions
What is a good ROI?
A 'good' ROI depends entirely on the asset class and risk involved. For UK stock market investments, a long-run average of around 7–10% per year is often cited. For property, net yields of 4–6% are common in many regions. Higher-risk ventures such as start-up equity may target 20%+ to justify the risk. Always compare ROI against the risk taken and alternative uses of the capital.
How do I calculate ROI?
ROI is calculated as: ROI (%) = (Net Profit / Cost of Investment) × 100. Net profit is the final value minus the initial cost. For example, if you invest £5,000 and receive £7,500, your net profit is £2,500 and your ROI is (2,500 / 5,000) × 100 = 50%.
What is the difference between ROI and profit margin?
ROI measures gain relative to the cost of the investment, making it useful for comparing different investments. Profit margin measures profit as a percentage of revenue, and is primarily used to assess business efficiency. A business can have a high profit margin but a poor ROI if the capital required to generate that profit is very large.
Does ROI account for time?
Basic ROI does not account for the time taken to achieve the return — a 50% ROI over 10 years is far less impressive than the same return over 1 year. To account for time, use annualised ROI (also called CAGR), which expresses the return as an equivalent annual rate. This calculator can compute annualised ROI if you enter the holding period in years.