Work out the return on investment of anything you put money into — and the annualized rate when you add the period.
ROI, return on investment, answers one question: for every real you put in, how much came back on top? The arithmetic is deliberately simple — subtract the investment from what you got back, divide by the investment, multiply by a hundred. Putting in R$ 10,000 and ending with R$ 12,500 is a profit of R$ 2,500 and an ROI of 25%. The same formula works for a stock position, a machine, a training course or a marketing campaign, which is why ROI became the common language between finance and every other department.
The catch is that a bare ROI has no clock in it. A 25% return is excellent in one year and mediocre in ten, yet both read as 25%. That is what the optional period field fixes: the tool raises 1 plus the ROI to the power of one over the number of years and subtracts one, giving the constant yearly rate that would have produced the same result. The 25% above becomes 11.80% a year over two years, or 4.56% a year over five. This compound form is used instead of dividing the ROI by the number of years, because a plain division ignores that each year builds on the balance the previous one left behind.
Read the number in context. ROI ignores taxes, brokerage fees, IOF and inflation, so a nominal 8% in a year when inflation ran at 6% is closer to 2% of real gain. It also ignores risk: two investments with the same ROI are not equivalent if one of them could have gone to zero. And for a marketing campaign the "investment" has to include everything the campaign consumed — media, production and the hours of the people involved — or the result flatters itself. This is an educational calculation, not a recommendation to invest in anything, and past returns say nothing about future ones. Every number is computed in JavaScript on your own device, and nothing you type is sent anywhere.
ROI = (total returned − amount invested) ÷ amount invested × 100. Annualized ROI = ((1 + ROI) ^ (1 ÷ years)) − 1, expressed as a percentage.
Subtract the amount invested from the total returned, divide the result by the amount invested and multiply by 100. R$ 10,000 that returns R$ 12,500 gives (12,500 − 10,000) ÷ 10,000 × 100 = 25%.
It depends entirely on the period, the risk and the alternative. A 25% ROI earned in one year beats the same 25% earned in five, which is why the annualized figure is the fair way to compare — measure it against what a low-risk alternative would have paid over the same window.
ROI is the total return over the whole period, with no reference to time; annualized ROI is the constant yearly rate that would produce that same total. Use ROI to describe a single closed operation and the annualized rate to compare operations of different lengths.
Yes. A negative ROI simply means less money came back than went in — an ROI of −20% means you recovered 80% of what you invested.
No. Every calculation runs in JavaScript on your device. Nothing you type is uploaded, logged or stored.
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