ROI measures how much profit you made relative to the cost of an investment. It's expressed as a percentage and answers one simple question: for every dollar I put in, how many dollars did I get back?
ROI is used everywhere — stock investing, real estate, marketing campaigns, employee training, equipment purchases and any business decision involving a cost and an expected return.
Total return, CAGR and net profit on any investment. Compare two options side by side.
Open ROI Calculator →A 70% ROI over 10 years is very different from a 70% ROI over 1 year. To compare investments fairly, you need annualized ROI — also called CAGR (Compound Annual Growth Rate).
Same 70% ROI — but Investment A returns 30.4%/year while Investment B returns only 5.45%/year. Without annualizing, you'd think they're equal. This is why annualized ROI is essential for any multi-year comparison.
| Investment Type | Typical Annual ROI | Risk Level | Notes |
|---|---|---|---|
| Savings Account | 3–5% | Zero | HYSA rates in 2026 |
| US Treasury Bonds (10yr) | 4.2–4.8% | Very Low | Risk-free benchmark |
| S&P 500 Index Fund | 10–10.5% | Medium | Historical average since 1957 |
| Real Estate (rental) | 7–12% | Medium | Includes appreciation + rent |
| Small Business | 15–30%+ | High | Wide variance, most fail |
| Angel/VC Investment | 20–40%+ | Very High | Most investments go to zero |
| Marketing (avg. digital) | 300–500% | Medium | $1 in → $3–5 out typically |
Any investment earning above the S&P 500's historical ~10% annual return deserves serious consideration. Any investment earning below 10% that carries significant risk should be compared against a simple index fund. The "hurdle rate" — minimum acceptable ROI — is typically the risk-free rate (currently ~4.5%) for very safe money, and 10%+ for equity-level risk.
The standard formula for marketing ROI:
| Marketing Channel | Average ROI | Notes |
|---|---|---|
| Email Marketing | 3,600% | $36 return per $1 spent (DMA 2026) |
| SEO / Content | 748% | Compounds over time, low ongoing cost |
| Google Ads (Search) | 200–400% | Varies heavily by industry |
| Social Media Ads | 100–300% | Facebook/Instagram average |
| TV/Radio | 80–200% | Hard to measure precisely |
| Trade Shows | 50–150% | High cost, B2B focused |
ROI tells you total return. CAGR tells you annual return. For any investment held longer than 1 year, always use CAGR for comparison — not raw ROI. A 200% ROI sounds impressive until you realize it took 20 years — which is only 5.6% per year, barely beating inflation.
| Asset | $100K Invested | 10-Year Value | ROI | Annualized |
|---|---|---|---|---|
| S&P 500 Index | $100,000 | $259,374 | 159% | 10%/yr |
| Rental Property | $100,000 (20% down on $500K property) | $180,000–$300,000 | 80–200% | 6–12%/yr |
| Small Business | $100,000 | $0–$500,000+ | Highly variable | −100% to 30%+ |
| Treasury Bonds | $100,000 | $156,000 | 56% | 4.5%/yr |
| Gold | $100,000 | $162,000 | 62% | 5%/yr |
Total return · CAGR · Net profit · Compare two investments side by side — all free.
Open ROI Calculator →A "good" ROI depends entirely on the time period and risk level. For annual returns: 3–5% is good for risk-free money, 7–10% is good for diversified equity investments, and 15%+ is excellent but usually involves higher risk. Always compare your ROI against a benchmark — typically the S&P 500's ~10% annual return for equity investments.
ROI = (Net Profit ÷ Cost of Investment) × 100. Net profit equals your final value minus your initial investment. For example, if you invested $10,000 and received $15,000 back, your ROI = ($5,000 ÷ $10,000) × 100 = 50%. For multi-year investments, use annualized ROI (CAGR) for fair comparison.
ROI is the total return over the entire investment period — it doesn't account for how long the investment was held. CAGR (Compound Annual Growth Rate) is the annualized return — how much the investment grew per year on average. Use ROI to know your total profit. Use CAGR when comparing investments held for different time periods.
Small businesses typically target 15–30% annual ROI to justify the risk and effort compared to passive stock market investing. Marketing ROI within a business should exceed 100% (meaning $2+ back for every $1 spent on marketing) to be worthwhile. Benchmark against what you could earn passively — if your business returns less than index funds with far more work, it may not be worth it financially.
Real estate ROI = (Net Annual Income + Appreciation) ÷ Total Investment × 100. Include all costs: purchase price, closing costs, renovation, property taxes, insurance, maintenance, property management (8–12% of rent), and vacancy (typically 5–8%). A realistic net ROI for rental property in most US markets is 5–10% annually. Use cash-on-cash return for leveraged properties.