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How to use Credit Karma’s ROI calculator
Your return on an investment, or ROI, gives you an estimate of the gain or loss you’ll achieve on an investment. You can use our ROI calculator to determine how well an investment may perform. And you can use it to look at different potential investments, comparing the cost of the investment versus estimated total returns.
To use the ROI calculator, you’ll need to enter the following information.
Keep in mind that our ROI calculator only provides an estimate based on the information you provide. It doesn’t consider other factors such as taxes, inflation or fees.
This is the amount of money that you originally put into the investment.
Your return is the amount you gain or lose on the investment.
Start date of investment
This is the date on which you made your initial investment.
End date of investment
Enter the date you expect your investment period to be over.
How to use the ROI calculator
Determining ROI can be important when you want to look at the profitability of an investment. And our ROI calculator makes it easy to estimate your potential ROI on an investment opportunity that you may be considering.
Depending on the information that you put into the calculator, you’ll be able to determine the investment’s potential gain or loss over a certain time period, your basic return on the initial investment and the annual ROI.
What does ROI mean?
ROI, or return on investment, is a calculation that provides an estimate of what an investment may be worth over time. This metric is typically used to help you see what type of financial gain — or perhaps even loss — you may get from an investment. As an investor, you can use ROI as a useful measure when calculating risk for a new investment opportunity or to look at the performance of existing or past investments.
How to calculate ROI
There are a couple of different ways to determine ROI. Let’s take a closer look.
- Basic ROI — To calculate the basic return on investment, you’d simply divide the profit by the initial investment amount and multiply it by 100.
(Profit / Cost of investment) x 100 = ROI
So if you made an investment of $1,000 and had a return of $1,500 (profit of $500), then your basic ROI would look like this:
($500 / $1,000) x 100 = $500 or 50% ROI
For this investment, your basic ROI comes out at 50% and you’ll make a gain of $500.
- Annualized ROI — If you want to consider how your investment will perform on a yearly basis, you’ll have to use a much more complicated formula to calculate what’s called annualized ROI. This can help you see the effects of compound interest on your money and how compounding frequency can make a difference in your return.
Using the ROI calculator
Our ROI calculator makes it easy to calculate both basic and annualized ROI just by entering a few numbers.
Let’s take a closer look at the same investment of $1,000 with a return of $1,500 and say that you started the investment on Aug. 2, 2015 and ended it on Feb. 14, 2022 (6.54 years).
Using the calculator, you’ll see that your basic ROI is 50% and your annualized ROI is 6.4%. And that your investment had a gain of $500.
What else to consider with ROI
When looking at an investment opportunity, ROI can only tell you so much. It doesn’t incorporate factors such as market volatility, dividends, taxes that may be due when you sell or inflation, which could reduce the purchasing power of your return. It also doesn’t take into account investment fees or other fees that may get deducted once your investment period ends.
So while a ROI calculation can help evaluate the profitability of different investments, keep in mind that other factors may affect your overall investment.