There is no universal "good" ROI number. A 5% return can be excellent for a low-risk savings account and terrible for a high-risk startup investment. Whether an ROI is good depends on the risk taken, the timeframe, and what else you could have done with the money.

Yes. A negative ROI means you lost money — the final value came back lower than what you put in. For example, spending $5,000 and getting back $4,250 is an ROI of −15%, a $750 loss.

What is the difference between ROI and profit?

Profit is a dollar amount: final value minus cost. ROI is a percentage: profit divided by cost. A $1,000 profit on a $10,000 investment is a 10% ROI; the same $1,000 profit on a $2,000 investment is a 50% ROI. ROI tells you how efficient each dollar was.

Does ROI account for time?

No — that is ROI's main limitation. A 40% return earned in one year is very different from a 40% return that took ten years. To compare returns earned over different periods, you need an annualized return, not plain ROI.

Should I include fees and taxes in the cost?

Yes. Honest ROI uses all-in costs: purchase price plus fees, commissions, taxes, maintenance, and any other money you spent to earn the return. Leaving costs out inflates the percentage and makes the result misleading.

ROI Calculator

Measure how hard your money worked. Enter what you put in and what you ended up with to get total return on investment and the annualized return (CAGR) — and compare two investments side by side to see the winner.

Simple ROI Dated cash flows (XIRR)

Initial investment ($)

Final value ($)

Years held

Advanced options

Additional contributions ($) — total

Extra money added along the way. Counted in total invested for ROI; CAGR is computed on the initial stake.

ROI vs annualized return

ROI tells you the total gain as a percentage of what you invested: a 60% ROI means you made 60 cents per dollar. But it ignores time — 60% over 2 years is excellent, over 20 years is weak. The annualized return (CAGR) fixes that by expressing growth as a steady per-year rate, making investments of different lengths directly comparable.

When you add contributions mid-way, ROI still works (profit ÷ everything you put in), but CAGR becomes approximate because money entered at different times. For precise dollar-weighted returns with irregular cash flows, investors use IRR/XIRR instead.

What counts as "invested"?

Include everything you paid: purchase price, fees, commissions, and additional contributions. Exclude money you never committed. For rental property, investors often compute ROI on cash invested (down payment + costs) rather than the full price — that is the cash-on-cash return, a stricter and more useful number.

Frequently Asked Questions

What is a good ROI?

It depends on risk and time. The stock market has averaged roughly 7–10% annualized over long periods. A "good" ROI beats what you could have earned in an index fund at similar risk — after annualizing, so time is accounted for.

Why annualize returns at all?

Because totals mislead across time. Investment A doubles your money in 4 years (100% ROI, ~19% CAGR); investment B triples it in 20 years (200% ROI, ~5.6% CAGR). B's total is bigger, but A grew more than three times faster per year.

Can ROI be negative?

Yes — if the final value is below total invested, ROI is negative. A −100% ROI means a total loss. CAGR handles losses too, as long as the final value is above zero.

Does ROI include dividends or rent?

It should. "Final value" means everything you walk away with: sale price plus any income received along the way (dividends, rent, interest). Add that income into the final value field.

ROI vs IRR — which should I use?

ROI for simple buy-and-hold with one cash in and one cash out. IRR (internal rate of return) when cash flows in and out at irregular times — it weights each dollar by how long it was invested.

ROI Calculator

ROI vs annualized return

What counts as "invested"?

Frequently Asked Questions

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