How to Calculate ROI on Anything (With Real Examples)
ROI is the single number that lets you compare any investment — stocks, property, a side hustle, even a kitchen renovation — on the same scale.
The ROI formula (memorise this)
ROI = (Net Profit ÷ Cost) × 100
Where Net Profit = Final Value − Cost. That's it. The result is a percentage, which means you can compare investments of completely different sizes on the same scale.
A 50% ROI means you earned half of your original investment as profit on top of getting your money back. A 100% ROI means you doubled your money. A negative ROI means you lost money.
Example 1: Stocks
You buy £1,000 of an index fund. A year later you've received £50 in dividends and the shares are worth £1,200.
- Cost: £1,000
- Final value: £1,200 + £50 dividends = £1,250
- Net profit: £1,250 − £1,000 = £250
- ROI: (£250 ÷ £1,000) × 100 = 25%
Open the ROI calculator with these numbers →
Example 2: A side hustle
You spend £300 on equipment to start a small craft business. After a year you've taken £900 in revenue and the equipment is worth £200 second-hand.
- Cost: £300
- Final value: £900 cash + £200 equipment = £1,100
- Net profit: £1,100 − £300 = £800
- ROI: (£800 ÷ £300) × 100 = 267%
That's a higher ROI than most stock investments — but only because the side hustle also required your time, which ROI doesn't count. More on that below.
Example 3: Property
You buy a flat for £180,000. Five years later you sell it for £220,000, having spent £8,000 on renovations and £4,000 on fees.
- Cost: £180,000 + £8,000 + £4,000 = £192,000
- Final value: £220,000
- Net profit: £220,000 − £192,000 = £28,000
- ROI: (£28,000 ÷ £192,000) × 100 = 14.6%
Over 5 years, that's about 2.8% per year annualised — fine, but not spectacular. For property, also compare this to the mortgage cost to see if leverage improves the return.
Example 4: Reselling
You buy vintage furniture at car boot sales for £50 total, spend a weekend restoring it, and sell the pieces for £180 on eBay (after fees).
- Cost: £50
- Final value: £180
- Net profit: £130
- ROI: (£130 ÷ £50) × 100 = 260%
This is why reselling can beat investing — but again, the missing variable is the hours you spent.
The thing ROI doesn't measure
ROI ignores two things that matter enormously:
- Time. A 50% ROI in one year is very different from 50% over ten years. For investments held over different periods, use the annualised return (the ROI calculator shows this when you enter a holding period).
- Effort. A 260% ROI on reselling sounds amazing until you realise it took 20 hours of your weekend. Compare the hourly rate to your day job before quitting it.
For pure passive investments (stocks, funds, savings), ROI is the whole story. For anything that requires your time, divide the net profit by the hours spent to get an effective hourly rate — then decide if it's worth it.
Frequently asked questions
What is the formula for ROI?
ROI = (Net Profit / Cost) × 100. Net profit is your final value minus what you paid. A 50% ROI means you earned half of your original investment as profit on top of getting your money back.
How do you calculate ROI on stocks?
Add up all dividends received plus the current value of the shares, subtract what you paid, then divide by what you paid and multiply by 100. For example, buy £1,000 of shares, receive £50 in dividends, sell for £1,200: ROI = (250 / 1000) × 100 = 25%.
Can ROI be negative?
Yes. If your final value is less than your cost, the ROI is negative. A -20% ROI means you lost 20% of what you invested.
Bottom line
ROI works on anything you can put a price on. The formula is the same whether you're comparing a £50 furniture flip to a £180,000 property. The trick is remembering what ROI doesn't capture — time and effort — and adding those back in mentally when you make decisions. Use the ROI calculator to plug in your own numbers, including a holding period for the annualised return.