ROI Calculator
Calculate Return on Investment
ROI Formula
ROI measures the gain or loss relative to the investment cost, expressed as a percentage.
Frequently Asked Questions
What is ROI and why is it important?
ROI (Return on Investment) is a percentage that measures the profit or loss generated relative to the amount invested. It is one of the most widely used metrics for evaluating the efficiency of an investment and comparing the profitability of different opportunities.
How is ROI calculated?
ROI is calculated using the formula: ROI = ((Final Value - Initial Investment) / Initial Investment) x 100. For example, if you invest Rs 50,000 and it grows to Rs 65,000, your ROI is ((65,000 - 50,000) / 50,000) x 100 = 30%.
What is the difference between ROI and annualized ROI?
Simple ROI shows the total return over the entire holding period regardless of time. Annualized ROI adjusts this to a per-year basis, allowing you to compare investments held for different durations fairly. A 50% ROI over 5 years is very different from 50% over 1 year.
What is considered a good ROI?
A good ROI depends on the investment type and associated risk. Stock markets historically deliver 10-15% annualized returns, while real estate may yield 8-12%. Any ROI that consistently beats inflation (5-6% in India) and fixed deposit rates is generally considered good.
Can ROI be negative?
Yes, a negative ROI means the investment lost money. This happens when the final value is less than the initial investment. Negative ROI is common in volatile markets over short periods, which is why evaluating investments over longer time horizons gives a clearer picture.