How to use it
- Use the formula below with your own figures.
The formula
ROI = (gain − cost) ÷ cost × 100%.
Worked example
Turning $1,000 into $1,250 is a 25% ROI.
Frequently asked questions
Does ROI include time?
No — use CAGR for annualized returns.
What counts as cost?
Include fees and taxes for a true figure.
Tips
- Time in the market beats timing the market.
- Reinvest returns to let compounding work.
- Keep fees low — they compound against you.
Key terms
- Compounding
- Earning returns on past returns.
- CAGR
- The smoothed annual growth rate.
- Yield
- Income as a percent of price.