Investment Parameters
- 1Enter your Initial Investment amount ($).
- 2Enter the Final Value or total gross revenue earned from the investment ($).
- 3Optionally enter any Additional Expenses or transaction fees ($).
- 4View your net profit or loss and total ROI percentage return.
Return on Investment (ROI) is a fundamental financial efficiency metric used to evaluate the profitability of an investment relative to its cost. ROI measures net gain or loss as a percentage of total investment cost.
Sum of initial capital invested plus additional fees or transaction expenses.
Total Cost = Initial Investment + Additional ExpensesFinal value minus total cost invested.
Net Profit = Final Value - Total CostPercentage return on total invested cost.
ROI (%) = (Net Profit / Total Cost) × 100 | Example: ($200 / $1,000) × 100 = 20%Net Profit = $1,200 - $1,000 = $200Total Cost = $105,000 | Net Profit = $120,000 - $105,000 = $15,000Total cost = 1000 + 50 = 1050; Net profit = 1200 − 1050 = 150; ROI = 150 / 1050 × 100- Un-annualized Metric: Standard ROI measures total cumulative return regardless of holding duration. A 20% ROI over 1 year is much more profitable than a 20% ROI over 10 years.
- Include All Expenses: For accurate ROI, always include transaction fees, maintenance costs, and taxes in total investment cost.
- Negative ROI: A negative ROI indicates an overall financial loss on the investment.
What does a positive vs negative ROI mean?
A positive ROI means the investment generated net profit. A negative ROI means total costs exceeded final revenue, resulting in a net financial loss.
Does ROI account for investment duration or time?
No. Basic ROI measures total percentage return over the entire investment holding period, without annualizing the rate.
What is the difference between ROI and profit margin?
ROI measures gain relative to total invested capital cost. Profit margin measures profit relative to total revenue generated.
How do additional costs affect the ROI?
Additional expenses are added to the initial investment to form the total cost. ROI is net profit (final value − total cost) divided by that total cost, so higher fees lower the ROI.
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