Understanding ROI

ROI (Return on Investment) tells you what percent you gained or lost. Annualized ROI lets you compare investments over different time frames.

What is ROI?

ROI = (Amount returned - Amount invested) / Amount invested x 100. If you invested $10,000 and got back $12,500, your ROI is 25%. It works for gains and losses — a negative ROI means you lost money.

📊 Use our ROI Calculator to compute it instantly, with optional annualized return.

Annualized Return

If you held an investment for 3 years and got 25% total return, that's different from 25% in one year. Annualized return = (Final/Initial)^(1/years) - 1. It tells you the equivalent "per year" rate.

Why It Matters

Compare investments — Stock A returned 30% in 2 years, Stock B returned 20% in 1 year. Annualized: A ~14%, B 20%.
Track performance — See how your portfolio or individual holdings are doing
Set expectations — Historical annualized returns help model future growth

Related guides

Explore more on Stascash:

Understanding Percentage Change — percent increase or decrease between two values
Understanding Compound Interest — how growth compounds over time
Understanding Breakeven — when costs equal revenue
ROI Calculator — compute ROI and annualized return

For informational purposes only. Not financial advice.