How to use the ROI Calculator
- Enter the total amount invested, including fees and any later contributions.
- Enter the final value or total amount received.
- Enter the holding period to get the annualised figure.
- Compare the annualised return, not the raw percentage, across different investments.
How the calculation works
Simple ROI is (final value − cost) ÷ cost, expressed as a percentage. Its weakness is that it says nothing about duration: a 40% return is excellent over one year and mediocre over eight. Annualising fixes this by converting the total gain into an equivalent compound yearly rate, which is what the CAGR formula does.
The cost figure decides whether the answer means anything. Transaction fees, platform charges, taxes on gains and — for property — stamp duty, legal costs and refurbishment all belong in the denominator, while rent, dividends or interest received belong in the numerator. Omitting either side produces a flattering number that will not survive contact with your bank statement.
ROI = (final − cost) / cost × 100 ; annualised = ((final / cost)^(1/years) − 1) × 100Source: Standard ROI and compound annual growth rate (CAGR) definitions used in investment analysis.
Worked example
A buy-to-let bought for 168,000 with 11,400 of fees, sold four years later for 214,000 after 33,600 of net rent.
- Total cost = 168,000 + 11,400 = 179,400.
- Total returned = 214,000 + 33,600 = 247,600.
- ROI = (247,600 − 179,400) / 179,400 = 38.0%.
- Annualised = (247,600 / 179,400)^(1/4) − 1 = 8.4%.
38% total over four years, which is an 8.4% annualised return — a very different impression from the headline figure.
Frequently asked questions
Should I use ROI or annualised return?+
Annualised, whenever the holding periods differ. Raw ROI only compares fairly when two investments ran for the same length of time.
What costs should be included?+
Everything you paid to acquire, hold and exit: fees, commissions, taxes, maintenance and financing costs. Leaving them out is the most common reason a real return disappoints.
Does ROI account for risk?+
No. Two investments with identical returns can carry wildly different chances of loss, so ROI should always be read alongside an assessment of what could go wrong.
Can ROI be negative?+
Yes, whenever the final value plus income is less than total cost. A −20% ROI means you recovered 80% of what you committed.
Last reviewed August 31, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.