ROI Calculator 2026
Calculate total return and annualized return (CAGR) on any investment — stocks, real estate, business projects, marketing campaigns. Real compound math, not just simple division.
Last updated October 2026 · Sources: S&P historical returns 1928-2025, NYU Stern Damodaran return databases, NCREIF real estate index
Investment details
Your return
Asset class historical returns
Long-term annualized returns by asset class. Use these as benchmarks for evaluating any specific investment.
| Asset class | Nominal return | Real return* | Risk level |
|---|---|---|---|
| High-yield savings (2026) | 4-5% | 1-2% | Very low |
| 10-year Treasury bonds | 5-5.5% | 2-3% | Low |
| Investment-grade corporate bonds | 5-7% | 2-4% | Low-medium |
| Real estate (residential) | 8-12% | 5-9% | Medium |
| S&P 500 (long-term) | 10% | 7% | Medium |
| Small-cap stocks | 11-12% | 8-9% | Medium-high |
| Private equity / venture | 12-20% | 9-17% | High |
| Crypto (highly variable) | −50% to +200% | Highly variable | Very high |
*Real return adjusts for inflation (assumed 3% long-term average). Past performance does not guarantee future results.
Frequently Asked Questions
What is ROI and how is it calculated?
ROI stands for Return on Investment. It measures the percentage gain or loss from an investment relative to its original cost. The formula is: ROI = (Final Value − Initial Cost) / Initial Cost × 100. If you invest $10,000 and end up with $15,000, your ROI is ($15,000 − $10,000) / $10,000 = 50%. ROI is widely used because it is simple and comparable across very different types of investments.
What is the difference between total ROI and annualized return?
Total ROI is the cumulative return over the entire holding period. Annualized return (also called CAGR — Compound Annual Growth Rate) converts that total return into an equivalent yearly rate, which makes it possible to compare investments held for different time periods. A 50% total ROI sounds great until you learn it took 10 years — that is only 4.14% per year. The same 50% return in 3 years annualizes to 14.47% per year, which is excellent.
What is a good ROI?
Context matters. The S&P 500 historically averages about 10% per year nominal (7% real after inflation). Bonds average 4-6%. Real estate (residential) averages 8-12% including appreciation and rental income. A small business should target a much higher ROI — usually 20%+ annualized — to compensate for the additional risk and effort. Venture capital targets 25-35% annualized but most funds underperform that target. For comparison, a savings account earns 4-5% in 2026, which is the absolute floor.
Does ROI account for time?
Not directly — that is its biggest limitation. A 50% ROI tells you nothing about how long it took. Always pair total ROI with annualized return to see the rate per year. For investments shorter than one year, annualized return can mislead in the other direction by extrapolating short-term gains. A 5% return in 3 months annualizes to 21.55% — but only if you can repeat the same return every quarter, which is rarely true.
How do I calculate ROI on a rental property?
There are several methods. Cash-on-cash ROI = annual cash flow / total cash invested (including down payment, closing costs, and repairs). Cap rate = net operating income / property value. Total ROI includes appreciation, principal paydown, and tax benefits in addition to cash flow. A typical rental property might have a 6-8% cash-on-cash ROI but a 12-18% total ROI when you include appreciation and mortgage paydown.
What is the difference between ROI and ROE?
ROI measures return on the total cost of an investment. ROE (Return on Equity) measures return on just your equity investment, accounting for borrowed money. If you buy a $100,000 property with $20,000 down and the property generates $8,000 in annual profit, your ROI is 8% but your ROE is 40% — leverage amplifies both returns and risk. Real estate investors focus heavily on ROE because of leverage; stock investors focus on ROI because most equity investments are unleveraged.
Should I include opportunity cost in ROI?
Sophisticated investors do. The "opportunity cost" of an investment is what you could have earned with the same money elsewhere. If you put $10,000 into a project earning 12% but could have earned 8% in an index fund, your "excess return" is only 4%. For comparing alternatives, this is more meaningful than headline ROI. Most simple ROI calculations skip this for clarity.
What costs should I include in the initial investment?
Everything you spent to make the investment work — purchase price, transaction fees, closing costs, initial repairs, training expenses, legal fees, and any working capital tied up. Excluding these costs inflates your ROI artificially. For a stock investment, this is usually just the purchase price plus brokerage commissions. For a business or real estate investment, it can be 5-15% more than the headline price.
How do I calculate ROI for a marketing campaign?
Marketing ROI = (Revenue from campaign − Cost of campaign) / Cost of campaign × 100. The hard part is attribution — figuring out which sales actually came from the campaign rather than other sources. Most marketers use UTM tracking, customer surveys, or attribution windows. A "good" marketing ROI varies dramatically by industry: direct response campaigns typically target 4:1 to 10:1 (300-900% ROI), while brand campaigns are harder to measure and often justified on softer metrics.
What is the rule of 72 and how does it relate to ROI?
The rule of 72 is a quick mental shortcut: divide 72 by your annualized return rate to get the approximate number of years needed to double your money. At 8% per year, money doubles in roughly 9 years. At 12% per year, in 6 years. At 6% per year, in 12 years. It works because of the math of compound growth and is accurate within a few percentage points for most realistic returns.
Why is ROI sometimes negative?
Because you can lose money. If your final value is less than your initial cost, ROI is negative. A $10,000 investment that ends at $7,500 has a −25% ROI. Negative ROI is common in early-stage businesses, speculative investments, and during market downturns. The key question is whether the loss is recoverable through future returns or permanent.
Can ROI be over 100%?
Yes. An ROI over 100% means you more than doubled your money. A 200% ROI means you tripled it. There is no upper limit. Early-stage venture investments occasionally produce 1,000%+ ROIs (10x or more), though most produce zero or negative returns. Lottery wins technically have astronomical ROIs but are not investments — they are gambling with negative expected value.
Sources: S&P historical returns 1928-2025 (NYU Stern Damodaran), NCREIF real estate index, Cambridge Associates private equity benchmarks, Federal Reserve consumer rate surveys, Morningstar fund returns.
Disclaimer: Past performance does not guarantee future results. ROI calculations exclude taxes, fees, and inflation unless explicitly stated. Not investment advice.
ROI and annualized ROI: why the second number matters more
Return on investment = (gain - cost) / cost. It says how much a dollar made, not how fast. A 30% return over 3 years and a 30% return over 5 years are very different results, and the annualized figure, which converts any period to a yearly rate, is the one that lets investments be compared.
| Cost | Value or proceeds | Period | ROI | Annualized ROI |
|---|---|---|---|---|
| $10,000 | $12,500 | 1 year | 25% | 25.0% |
| $50,000 | $65,000 | 3 years | 30% | 9.1% |
| $200,000 | $260,000 | 5 years | 30% | 5.4% |
| $5,000 | $4,000 | 1 year | -20% | -20.0% |
Annualized ROI = (value / cost)^(1 / years) - 1. The 5 year, 30% result is below what a savings account paid in 2026.
Worked example
A rental property bought for $200,000 and sold five years later for $260,000: ROI 30%. Annualized: (260,000 / 200,000)^(1/5) - 1 = 1.3^0.2 - 1 = 5.4% a year. If it also produced $3,000 a year of net rent, the total gain is $75,000, ROI 37.5%, annualized about 6.6%. Against a stock index fund that averaged 10% over the same five years, the property underperformed, before counting the hours spent on it.
What to include in cost and gain
Cost: purchase price plus every cost of acquiring and holding the investment (closing costs, commissions, fees, repairs, taxes paid). Gain: sale proceeds plus income received (rent, dividends, interest) minus costs of sale and taxes on the gain. Leaving out the $9,000 of closing costs and the $15,600 of selling costs on the property example drops the real ROI from 30% to about 17%, and the annualized figure from 5.4% to 3.2%. The most flattering ROIs are the ones that forgot the costs.
ROI for a business decision
A $20,000 marketing campaign that brings in $60,000 of sales at a 40% gross margin produces $24,000 of gross profit: ROI = (24,000 - 20,000) / 20,000 = 20%. Measured on revenue instead of profit it would show 200%, which is the error behind most disappointing campaigns. A new machine costing $50,000 that saves $18,000 a year in labor pays back in 2.8 years; its ROI over a 5 year life is (90,000 - 50,000) / 50,000 = 80%, 12.5% annualized, before maintenance and financing.
Limits of the number
ROI ignores risk, timing of cash flows within the period, and the size of the investment. A 50% return on $1,000 is less useful than 8% on $100,000. For investments with cash flows at different times (a rental with monthly rent, a business with uneven profits), the internal rate of return handles the timing properly; for a simple buy-and-sell, annualized ROI is enough.