Start from an example:
Investment
$
$
Everything you got back, including the original money.months
Used for the annualized ROI.ROI ignores risk and the timing of cash flows in between. Use it to compare simple options.
How ROI is calculated
ROI
(returned − invested) ÷ invested × 100The basic return in percent. It does not care how long the money was tied up.
Annualized ROI
(returned ÷ invested)^(12 ÷ months) − 1Turns the return into a yearly rate, so a 2-month and an 18-month project can be compared fairly.
Multiple
returned ÷ investedHow many dollars came back for each dollar in. 1.44× means ¥10.44 per ¥7.
Frequently asked questions
What is a good ROI?
It depends on risk and time. Compare it with what the same money could earn elsewhere over the same months, using the annualized figure.
Why is my annualized ROI higher than my ROI?
The money was held for less than 12 months. A 45% gain in 2 months compounds to a much larger yearly rate.
Should the amount returned include my original money?
Yes. Enter the total you got back. The calculator subtracts what you invested to get the gain.