ROI Calculator
Calculate Your Return on Investment
ROI (Return on Investment) is the single most important metric for investors, business owners, and marketers. It answers the fundamental question: "For every dollar I spent, how many dollars did I get back?"
CalculatorBud’s **ROI Calculator** helps you evaluate the efficiency of an investment. Whether you are flipping a house, buying stocks, or running a marketing campaign, this tool calculates your percentage gain (or loss) instantly.
The ROI Formula
The basic formula for calculating ROI is relatively simple:
Where:
- Net Profit = Total Amount Returned - Amount Invested
- Cost of Investment = The initial capital you put in.
The Trap: Simple ROI vs. Annualized ROI
One of the biggest mistakes investors make is ignoring Time.
Imagine two scenarios:
- Investment A: You make a 20% return in 1 year.
- Investment B: You make a 20% return in 5 years.
Both have an ROI of 20%, but Investment A is significantly better. This is why our calculator includes an Annualized ROI field. This metric (also known as CAGR) tells you what your effective return was per year, allowing you to compare short-term and long-term investments fairly.
Real World Examples
🏠 Real Estate
You buy a fixer-upper house for $200,000. You spend $50,000 on renovations (Total Investment: $250,000). You sell it for $325,000.
- Profit: $75,000
- ROI: ($75,000 / $250,000) × 100 = 30% Return
📈 Stock Market
You buy $1,000 worth of Apple stock. Five years later, you sell it for $1,800.
- Total ROI: 80%
- Annualized ROI: approx 12.5% per year.
What is a "Good" ROI?
A "good" return depends entirely on the risk and the asset class. Here are general benchmarks:
| Investment Type | Average Annual ROI | Risk Level |
|---|---|---|
| Savings Account | 0.5% - 4% | Very Low |
| Stock Market (S&P 500) | 7% - 10% | Medium |
| Real Estate | 8% - 12% | Medium/High |
| Small Business | 15% - 30%+ | Very High |