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ROI Calculator
Calculate Return on Investment
Investment Details
ROI (Return on Investment) measures the profitability of your investment. It shows how much profit or loss you've made relative to your initial investment.
Optional: Used for calculating annualized returns
ROI Formula:
ROI = (Net Profit ÷ Investment Cost) × 100
Net Profit = Final Value - Initial Investment
ROI Results
Detailed Breakdown
Understanding Returns:
• ROI: Overall percentage return
• Absolute Return: Total percentage gain/loss
• Annualized Return: Average yearly return
• CAGR: Smoothed annual growth rate
ROI Calculator: Investment Performance Measurement Guide
A Return on Investment (ROI) Calculator is an essential financial tool that measures the profitability and efficiency of investments by comparing gains or losses against the initial investment cost. ROI is expressed as a percentage, providing a standardized metric to evaluate performance across different investment types—stocks, real estate, mutual funds, business ventures, marketing campaigns, or educational expenses—enabling objective comparison and informed decision-making.
Understanding ROI is critical for investors, business owners, marketers, and financial planners to assess whether investments are generating adequate returns, identify underperforming assets, allocate capital efficiently, and justify investment decisions to stakeholders. A positive ROI indicates profit (returns exceed costs), while negative ROI signals losses. However, ROI alone doesn't account for time horizons or risk—which is why our calculator also computes annualized returns and CAGR (Compound Annual Growth Rate) for comprehensive performance analysis.
This free ROI Calculator provides instant calculations with detailed breakdowns showing initial investment, final value, net profit/loss, absolute returns, annualized returns, and CAGR. Whether you're evaluating stock market gains, comparing real estate investments, measuring business project returns, or analyzing marketing campaign effectiveness, accurate ROI calculation helps optimize portfolio allocation and maximize wealth creation over time.
Understanding ROI Components
Initial Investment (Cost)
The Initial Investment or Cost of Investment is the total capital deployed at the beginning, including purchase price, fees, taxes, and associated costs. For stocks, it's purchase price + brokerage. For real estate, it's property price + registration + stamp duty. For business projects, it's capital expenditure. Accurate cost calculation is crucial—underestimating costs inflates ROI and creates misleading performance metrics.
Final/Current Value
The Final Value or Current Value represents the investment's worth at exit or present day, including sale proceeds, current market value, or realized gains. For sold assets, it's net sale value after deducting fees/taxes. For ongoing investments (stocks, mutual funds), it's current market valuation. For rental property, include accumulated rental income plus current property value when calculating total returns.
Net Profit/Loss
Net Profit (or Loss) is the absolute monetary gain or loss from the investment, calculated as Final Value minus Initial Investment. A positive value indicates profit; negative indicates loss. For example, investing ₹1,00,000 and receiving ₹1,50,000 yields ₹50,000 net profit. This figure represents actual wealth created or destroyed, providing the numerator for ROI percentage calculation.
ROI Percentage
ROI Percentage standardizes returns as a ratio of profit to investment cost, calculated as (Net Profit ÷ Initial Investment) × 100. For example, ₹50,000 profit on ₹1,00,000 investment equals 50% ROI. This percentage enables comparison across investments of different sizes—100% ROI on ₹10,000 (₹10,000 profit) versus 10% ROI on ₹10,00,000 (₹1,00,000 profit) helps identify which delivers better efficiency relative to capital deployed.
Annualized Return
Annualized Return converts total returns into an average yearly percentage by dividing absolute ROI by investment period in years. If 50% ROI was earned over 5 years, annualized return = 10% per year. This simple average helps compare investments held for different durations. However, it doesn't account for compounding—hence CAGR provides a more accurate time-adjusted metric for multi-year investments.
CAGR (Compound Annual Growth Rate)
CAGR measures the smoothed annual growth rate assuming returns compound each year, calculated as [(Final Value ÷ Initial Investment)^(1 ÷ Years)] - 1 × 100. For ₹1,00,000 growing to ₹1,61,051 in 5 years, CAGR = 10% (even though simple annualized return would be 12.21% per year). CAGR accounts for compound growth and provides the most accurate annual return metric for long-term investments.
How to Use This ROI Calculator
- Enter Initial Investment Amount: Input the total capital invested at the beginning in rupees. Include all costs—purchase price, brokerage fees, legal charges, taxes, registration fees, and any other upfront expenses. For business projects, include full capital expenditure. Underestimating initial costs inflates ROI calculations.
- Input Final/Current Value: Enter the investment's current market value or realized exit value. For sold investments, use net proceeds after deducting exit fees and taxes. For ongoing investments, use current market valuation. For rental properties, add accumulated rental income to current property value for total return calculation.
- Specify Investment Period (Optional): Enter the duration in years the investment was held (can use decimals like 2.5 for 2.5 years). This is optional for basic ROI but required for calculating annualized returns and CAGR. Time-adjusted metrics help compare investments held for different periods—crucial for portfolio analysis.
- Review ROI Results: Instantly view your ROI Percentage (profit ratio), Net Profit/Loss (absolute gain), Absolute Return (total percentage gain), and if period specified, Annualized Return and CAGR. Positive values (green) indicate profit; negative (red) indicate losses.
- Understand Return Metrics: ROI shows overall profitability regardless of time. Absolute Return equals ROI. Annualized Return is simple average per year. CAGR accounts for compounding and provides the most accurate annual growth rate. Use CAGR for long-term investments (3+ years) to compare against benchmarks like Nifty 50 (historical CAGR ~12%).
- Compare and Decide: Calculate ROI for multiple investments to identify top performers and underperformers. Consider rebalancing portfolio by moving capital from low-ROI to high-ROI opportunities. Remember: ROI doesn't capture risk—40% ROI with high volatility may be less desirable than 20% ROI with stability for risk-averse investors.
Practical Example: Comparing Investment Returns Across Asset Classes
Scenario: Meera invested ₹5,00,000 across four different asset classes 5 years ago. She wants to calculate ROI, annualized returns, and CAGR for each to determine which investments performed best and guide future allocation decisions.
| Investment | Initial Investment | Current Value | Net Profit | ROI % | CAGR (5 years) |
|---|---|---|---|---|---|
| Bank Fixed Deposit | ₹5,00,000 | ₹6,90,000 | ₹1,90,000 | 38% | 6.64% |
| Equity Mutual Fund | ₹5,00,000 | ₹9,25,000 | ₹4,25,000 | 85% | 13.08% |
| Residential Property | ₹50,00,000 | ₹62,00,000 | ₹12,00,000 | 24% | 4.41% |
| Gold | ₹5,00,000 | ₹6,20,000 | ₹1,20,000 | 24% | 4.41% |
Key Insights:
- Equity mutual fund leads across all metrics: 85% ROI and 13.08% CAGR significantly outperform other asset classes over the 5-year period. This demonstrates equity's wealth-creation potential over medium-to-long horizons, despite higher short-term volatility.
- Fixed deposit provides stability but limited growth: 38% ROI (6.64% CAGR) barely beats inflation (~6% average). Real returns are minimal. FDs serve capital preservation and liquidity needs but aren't optimal for wealth multiplication over longer periods.
- Real estate shows absolute profit but poor CAGR: While ₹12 lakh profit sounds substantial, 4.41% CAGR is poor considering illiquidity, maintenance costs, property taxes, and capital locked for 5 years. If rental income (₹10,000/month × 60 months = ₹6 lakhs) is added, total value becomes ₹68 lakhs, improving ROI to 36% and CAGR to 6.36%—still below equity.
- Gold delivers modest returns: 24% ROI (4.41% CAGR) aligns with historical gold performance. Gold acts as inflation hedge and portfolio diversifier but isn't a high-growth asset. Suitable for 10-15% portfolio allocation for risk mitigation, not wealth creation.
- Size of investment doesn't determine success: Real estate's ₹12 lakh absolute profit is impressive, but the ₹4.25 lakh gain from equity fund (on 1/10th capital) demonstrates superior capital efficiency—freeing ₹45 lakhs for other opportunities while delivering competitive absolute returns.
Portfolio Strategy Tip: Past performance doesn't guarantee future results. Meera's analysis suggests increasing equity allocation from current levels, reducing real estate exposure (or adding REITs for liquidity), maintaining 10-15% gold for stability, and keeping 6-12 months expenses in FDs for emergency funds. Rebalance annually to maintain target allocation as asset values fluctuate. Diversification across multiple asset classes reduces overall portfolio risk while capturing growth opportunities.
Why ROI Calculator Matters
- Objective Performance Measurement: ROI provides standardized metrics to evaluate whether investments are meeting expectations, beating inflation, and generating wealth. Eliminates emotional biases and anchoring—just because you're emotionally attached to a family property doesn't mean it's a good investment if CAGR is 3% while equities deliver 12%.
- Compare Apples to Oranges: ROI enables direct comparison across vastly different investment types and sizes—₹10 lakh in mutual funds versus ₹50 lakh in real estate versus ₹5 lakh in gold versus ₹2 lakh in business venture. Percentage-based metrics reveal which delivers better capital efficiency regardless of absolute amounts invested.
- Identify Portfolio Winners and Losers: Regular ROI calculation reveals top performers worth increasing allocation and underperformers worth exiting or reducing. Helps implement systematic portfolio rebalancing—book profits from overperforming assets and redirect to undervalued or higher-potential opportunities, maximizing compound growth over time.
- Business and Marketing Decisions: Beyond financial investments, ROI evaluates business projects, marketing campaigns, employee training programs, and capital expenditures. If digital marketing spends ₹2 lakhs and generates ₹10 lakhs revenue (400% ROI), it justifies budget increases. If new equipment costs ₹50 lakhs but saves only ₹3 lakhs annually (6% ROI), reconsider the investment.
- Benchmark Against Standards: Compare your investment ROI against relevant benchmarks—equity funds against Nifty 50 (12-13% CAGR), debt funds against bank FD rates (6-7%), real estate against REIT returns (8-9%), gold against inflation (6%). Underperforming the benchmark suggests passive index investing might yield better risk-adjusted returns.
- Account for Opportunity Cost: ROI reveals hidden opportunity costs. If your rental property delivers 5% CAGR but equity funds return 12% CAGR, you're losing 7% annual growth by holding property instead—₹50 lakh over 10 years grows to ₹1.62 crores at 12% versus ₹81 lakhs at 5%, a ₹81 lakh opportunity cost. Quantifying this motivates better asset allocation.
Frequently Asked Questions
Basic ROI Formula: ROI = [(Final Value - Initial Investment) ÷ Initial Investment] × 100
Step-by-step example:
- Initial Investment: ₹2,00,000 (includes ₹1,95,000 purchase price + ₹5,000 fees)
- Final Value: ₹2,80,000 (sale proceeds after fees)
- Net Profit: ₹2,80,000 - ₹2,00,000 = ₹80,000
- ROI: (₹80,000 ÷ ₹2,00,000) × 100 = 40%
For CAGR (if held 3 years): CAGR = [(2,80,000 ÷ 2,00,000)^(1÷3) - 1] × 100 = [(1.40)^0.333 - 1] × 100 = 11.87%
The 40% total return over 3 years translates to 11.87% compounded annual growth rate, accounting for compound effects.
ROI (Return on Investment): Overall percentage gain/loss. Formula: (Net Profit ÷ Cost) × 100. Time-agnostic—doesn't consider how long investment was held.
Absolute Return: Identical to ROI. Total percentage change from initial to final value. Used interchangeably with ROI in investment contexts.
CAGR (Compound Annual Growth Rate): Smoothed annual return assuming profits compound yearly. Formula: [(Final÷Initial)^(1÷Years) - 1] × 100. Accounts for time and compounding.
Example: ₹1,00,000 becomes ₹2,00,000 in 6 years
- ROI / Absolute Return: 100% (doubled money)
- Simple Annualized Return: 100% ÷ 6 = 16.67% per year (incorrect—doesn't compound)
- CAGR: 12.25% per year (correct compounded growth rate)
When to use what: Use ROI for quick profitability checks. Use CAGR when comparing investments held for different periods or measuring against annual benchmarks. CAGR is the gold standard for investment performance reporting.
"Good" ROI depends on asset class, time horizon, risk level, and market conditions. Here are Indian market benchmarks:
Investment ROI Benchmarks:
- Bank FD: 6-7% annually (safe, guaranteed)
- PPF/EPF: 7-8% annually (safe, tax-free)
- Debt Mutual Funds: 7-9% annually (low-moderate risk)
- Gold: 8-10% CAGR historically (inflation hedge)
- Real Estate: 8-12% CAGR (illiquid, location-dependent)
- Balanced/Hybrid Funds: 10-12% CAGR (moderate risk)
- Equity Mutual Funds: 12-15% CAGR (higher risk, long-term)
- Direct Equity (Stocks): 15-20%+ CAGR possible (highest risk, skill-dependent)
Business/Marketing ROI:
- Digital Marketing: 300-500% ROI (₹1 spent returns ₹3-5) considered excellent
- Business Projects: 20-30% annual ROI minimum to justify capital deployment
- Employee Training: 200-300% ROI (productivity gains vs training costs)
Key principle: ROI should beat inflation (6%) + risk premium. Risk-free investments should yield 6-7%. Moderate-risk investments should deliver 10-12%. High-risk investments should target 15%+ to justify volatility exposure.
Yes, absolutely. Comprehensive ROI should include ALL returns—capital appreciation PLUS income generated (dividends, interest, rent).
Example: Stock investment
- Bought 100 shares at ₹500 = ₹50,000 initial investment
- Current price ₹700 = ₹70,000 market value
- Received ₹5,000 total dividends over 3 years
- Capital Gain ROI: (₹70,000 - ₹50,000) ÷ ₹50,000 = 40%
- Total Return ROI: (₹70,000 + ₹5,000 - ₹50,000) ÷ ₹50,000 = 50%
Example: Rental property
- Property bought for ₹50 lakhs (including all costs)
- Current value ₹60 lakhs (10 years later)
- Collected ₹15,000/month rent × 120 months = ₹18 lakhs total rental income
- Capital Appreciation ROI: (₹60L - ₹50L) ÷ ₹50L = 20% over 10 years (1.84% CAGR)
- Total Return ROI: (₹60L + ₹18L - ₹50L) ÷ ₹50L = 56% (4.55% CAGR)
Ignoring rental income dramatically understates real estate returns. Always include income generation in ROI calculations for accurate performance assessment and fair comparison across asset classes.
Two approaches: Pre-tax ROI (gross returns) and Post-tax ROI (net returns). Both are useful for different purposes.
Pre-tax ROI: Ignore taxes, calculate based on gross gains. Useful for comparing investments with different tax treatments (LTCG on equity vs debt, EEE benefits of PPF). Shows pure investment performance.
Post-tax ROI: Deduct applicable taxes from final value before calculating returns. Shows actual money in your pocket. More realistic for personal finance decisions.
Example: Equity mutual fund (Long Term Capital Gains)
- Initial Investment: ₹10,00,000
- Final Value after 3 years: ₹15,00,000
- Capital Gain: ₹5,00,000
- Tax (10% LTCG on gains above ₹1 lakh): (₹5,00,000 - ₹1,00,000) × 10% = ₹40,000
- Pre-tax ROI: (₹5,00,000 ÷ ₹10,00,000) × 100 = 50%
- Post-tax ROI: (₹5,00,000 - ₹40,000) ÷ ₹10,00,000 × 100 = 46%
Tax-advantaged instruments: PPF (EEE—exempt at entry, accumulation, exit), EPF (EEE), NPS (EET—taxable at withdrawal), ELSS (lock-in 3 years, LTCG applies). Factor in tax benefits when comparing investments—PPF's 7.1% tax-free equals ~9.86% taxable return for someone in 28% tax bracket.
Real estate ROI is often overestimated because people ignore hidden costs and opportunity costs:
Hidden costs reducing ROI:
- Acquisition costs: Stamp duty (5-7%), registration (1%), legal fees, broker commission (1-2%) add 7-10% to purchase price
- Holding costs: Property tax, maintenance charges (₹2-5 per sq ft/month), repairs, insurance—typically 1-2% of value annually
- Exit costs: Brokerage (1-2%), capital gains tax (20% LTCG with indexation after 2 years)
- Vacancy and tenant issues: 2-3 months vacancy between tenants, unpaid rent, damage repairs reduce effective rental income
Example showing realistic ROI:
- Property listed at ₹50 lakhs + 8% costs = ₹54 lakhs actual investment
- Current value ₹65 lakhs after 8 years
- Holding costs ₹40,000/year × 8 years = ₹3.2 lakhs
- Rental income ₹15,000/month × 90 months (vacancy adjusted) = ₹13.5 lakhs
- Exit costs 2% = ₹1.3 lakhs
- Net proceeds: ₹65L + ₹13.5L - ₹3.2L - ₹1.3L = ₹74 lakhs
- ROI: (₹74L - ₹54L) ÷ ₹54L = 37% over 8 years (4.03% CAGR)
While ₹20 lakh profit sounds good, 4% CAGR is poor compared to equity funds (12%) or even balanced funds (10%). Real estate works best when purchased below market rates, in high-growth locations, or provides tax advantages (home loan interest deduction under Section 24).
Yes, ROI can be negative, indicating a loss where final value is less than initial investment. The magnitude shows loss severity.
Examples of negative ROI:
- -10% ROI: Lost 10% of capital. ₹1,00,000 investment now worth ₹90,000 (₹10,000 loss)
- -50% ROI: Lost half your money. ₹1,00,000 now worth ₹50,000 (₹50,000 loss)
- -100% ROI: Complete loss. Investment worthless (bankruptcy, fraud, failed startup)
Common causes of negative ROI:
- Market downturns: Stock market crashes, real estate bubbles bursting (2008 global crisis saw -30% to -50% equity returns)
- Poor stock selection: Investing in fundamentally weak companies (Kingfisher Airlines, Yes Bank before recovery)
- Timing issues: Buying at market peaks, forced to sell during troughs due to liquidity needs
- Business failures: Startup investments, failed projects, unviable business ventures
- Fraud/scams: Ponzi schemes, fake IPOs, unregulated chit funds
What to do with negative ROI investments:
- Don't panic sell: Temporary losses are normal. Equity investments show negative ROI 30% of years but positive over 10+ years
- Average down: If fundamentals are strong but price dropped, buying more at lower prices reduces average cost (rupee cost averaging)
- Tax loss harvesting: Book losses before March 31st to offset capital gains tax on profitable investments
- Cut losses on duds: If business fundamentals deteriorated (not just price), exit and redeploy capital to better opportunities
Use CAGR (Compound Annual Growth Rate) to fairly compare investments held for different durations. Simple ROI is misleading when time varies.
Problem with simple ROI:
- Investment A: 50% ROI in 2 years
- Investment B: 100% ROI in 5 years
- Which is better? Can't tell from ROI alone.
Solution using CAGR:
- Investment A: [(1.50)^(1÷2) - 1] × 100 = 22.47% CAGR
- Investment B: [(2.00)^(1÷5) - 1] × 100 = 14.87% CAGR
- Investment A is better—delivers 22.47% annualized vs 14.87%
Practical comparison example:
| Investment | Period | Total ROI | CAGR | Rank |
|---|---|---|---|---|
| Gold | 10 years | 90% | 6.63% | 4th |
| FD | 5 years | 38% | 6.64% | 3rd |
| Real Estate | 7 years | 65% | 7.45% | 2nd |
| Equity Fund | 8 years | 110% | 9.65% | 1st |
Gold's 90% ROI looks impressive but spread over 10 years equals only 6.63% annually. Equity fund's 110% over 8 years (9.65% CAGR) wins. Always annualize returns using CAGR for fair comparison.
Opportunity Cost is the potential benefit you forgo by choosing one investment over another. An investment with positive ROI can still be a poor decision if alternative investments would have delivered higher returns.
Example:
- You invest ₹10 lakhs in real estate, earn 5% CAGR over 10 years → ₹16.29 lakhs
- If instead invested in equity mutual fund at 12% CAGR → ₹31.06 lakhs
- Opportunity cost: ₹31.06L - ₹16.29L = ₹14.77 lakhs foregone
- Your real estate gained ₹6.29 lakhs, but you "lost" ₹14.77 lakhs in potential returns
Calculating opportunity cost-adjusted returns:
If benchmark (equity index) delivers 12% and your investment delivers 8%, your opportunity cost is 4% annually—you're underperforming by 4% per year relative to available alternatives.
Practical implications:
- Cash sitting idle: 0% ROI means losing 6% annually to inflation—negative real returns
- Low-return assets: Savings account at 3% loses to FD at 7% and equity at 12%—huge opportunity cost over decades
- Sunk cost trap: Holding losing investments hoping to "break even" instead of cutting losses and redeploying to better opportunities
Decision framework: Always compare investment ROI against risk-appropriate benchmarks. If underperforming, either fix the strategy or move capital to better-performing assets. Time is your most limited resource—opportunity costs compound just like returns.
ROI works for both, but interpretation differs:
Short-term investments (< 1 year):
- Simple ROI percentage is sufficient—annualization less relevant
- Focus on absolute returns and liquidity
- Examples: Trading stocks, short-term FDs, arbitrage opportunities
- Target: Beat savings account (3-4%) + inflation (6%) = minimum 10% for worthwhile short-term deployment
Long-term investments (3+ years):
- Use CAGR instead of simple ROI for accurate annual growth representation
- Focus on compound growth and wealth multiplication
- Examples: Retirement funds, child education corpus, wealth creation
- Target: 12-15% CAGR to significantly beat inflation and create real wealth
Medium-term investments (1-3 years):
- Calculate both ROI and CAGR for comprehensive view
- Balance growth potential with moderate liquidity needs
- Examples: Goal-based savings (car purchase in 2 years, vacation fund)
- Target: 8-12% CAGR depending on risk tolerance
Key principle: The longer your investment horizon, the more important CAGR becomes over simple ROI. For 1-month investment, 5% return is excellent (60% annualized). For 10-year investment, 50% total return is mediocre (4.14% CAGR). Always context-dependent.