Compare what you put in with what you got back. Add the holding period to see the yearly rate, which makes investments of different lengths comparable.
Return on investment
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ROI = (Returned − Invested) ÷ Invested × 100
ROI alone ignores time: 40% over three years is about 11.9% a year, while 40% over ten years is only 3.4% a year. The annualized return is the steady yearly rate that would turn the same investment into the same result.
Annualized = (Returned ÷ Invested)1 ÷ years − 1
It depends on the risk. Compare the annualized figure with a safe alternative such as a savings account or government bond over the same period.
Yes. Add dividends or rent received to the amount returned, and add fees, taxes and repairs to the amount invested.