Understanding your calculation
Method, example and limitations
How the calculation works
Return on investment compares net gain with the investment cost: ROI = (proceeds − cost) ÷ cost × 100. Include the applicable expenses when deciding what counts as cost and proceeds.
Example to check
An investment costing $1,000 and returning $1,200 has a $200 gain and a 20% total ROI before any omitted fees or taxes.
Before using the result
Total ROI is not automatically an annual return. The investment period, cash-flow timing, risk and borrowing costs matter when comparing opportunities. A zero initial cost has no defined percentage ROI.