ROI Calculator

ROI (Return on Investment) measures the profitability of an investment as a percentage of its cost. The formula is (Net Return ÷ Investment Cost) × 100. A positive result means profit; a negative result means a loss. Figures from this calculator are for illustrative purposes only.

A good ROI depends on context. For stock market investments, 7–10% annually is generally considered healthy. For marketing campaigns, a 5:1 return (500% ROI) is considered strong — meaning £5 revenue for every £1 spent. For business projects, anything above your cost of capital is positive. Higher returns typically carry higher risk, so always compare investments on a risk-adjusted basis.

The ROI formula is: ROI = ((Final Value − Investment Cost) ÷ Investment Cost) × 100. Example: you spend £5,000 on a marketing campaign and generate £20,000 in revenue. Net return = £15,000. ROI = (£15,000 ÷ £5,000) × 100 = 300%. This works for any type of investment — real estate, stock market positions, equipment, or marketing spend. Enter your figures into this investment ROI calculator and the result appears instantly.

ROI and rate of return both measure investment performance but differ in scope. ROI shows profit or loss as a percentage of cost for the total investment period. Rate of return is typically annualised — allowing fair comparison across investments held for different lengths of time. When comparing investments with different time horizons, use annualised rate of return rather than raw ROI. To put your result in context, compare it to the current interest rate — if a savings account pays 4.5%, an investment with 4% ROI over the same period has underperformed. For major investing decisions, consult a financial adviser.

ROI is useful for quick comparisons but has real limitations. It ignores time — a 100% ROI over 10 years is far less impressive than 100% over 1 year. It also ignores risk, cash flow, and the opportunity cost of the purchase price. For major investing decisions, use ROI alongside net present value (NPV), payback period, and internal rate of return (IRR). The bottom line: ROI works best as a fast filter, and the other metrics help you decide between shortlisted options.

Net income is the amount of profit in pounds — your total return minus all costs. ROI expresses that same profit relative to what you invested, as a percentage. Example: two projects each generate £10,000 of net income, but one required £20,000 of investment (50% ROI) and the other £100,000 (10% ROI). The net income is identical; the ROI shows the first project used capital far more efficiently. Track both — net income tells you what you earned, ROI tells you how hard your money worked.

Divide your annual net rental income (rent received minus mortgage interest, maintenance, insurance, letting fees, and void periods) by your total cash invested — usually the deposit plus stamp duty and purchase costs. Example: £12,000 annual rent with £4,000 of costs gives £8,000 net income; on £80,000 invested, that is a 10% annual ROI. This differs from gross rental yield, which divides rent by the full property price and ignores costs. Any capital growth when you sell adds to the overall return.

Annualised ROI converts a total return into a per-year rate so investments held for different lengths of time can be compared fairly. The formula: ((1 + Total ROI) ^ (1 ÷ Years)) − 1. Example: a 60% total ROI over 5 years is roughly 9.9% per year — noticeably less impressive than 60% in a single year. Use annualised figures whenever you compare an investment against alternatives quoted in annual terms, such as savings rates or stock market averages.