What is Return on Investment (ROI) and how is it calculated?

ROI measures the profit or loss generated by an investment relative to its initial cost. The formula is: ROI (%) = [(Final Value - Initial Cost) / Initial Cost] × 100.

What is the difference between Simple ROI and Annualized ROI (CAGR)?

Simple ROI calculates the total percentage return from inception to exit regardless of how long the asset was held. Annualized ROI (CAGR) measures the geometric mean annual return rate per year over the investment holding tenure.

What is considered a good ROI in India?

A 'good' ROI depends on the risk profile and asset class. In India, equity mutual funds and benchmark indices historically deliver 12% to 15% annualized ROI over 5+ year horizons, while debt funds and Fixed Deposits yield 6% to 8%.

Yes. If the amount returned is lower than your initial invested capital, your net gain is negative, which produces a negative ROI percentage representing capital loss.

Should dividends and interest be included when calculating ROI?

Yes. To accurately reflect total return on investment, all income cash flows such as dividends, interest payouts, and rental income should be added to the final asset value.

ROI Calculator (Return on Investment)

Calculate your total return on investment, net profit or loss, total ROI percentage, and annualized compound growth rate (CAGR).

Amount invested

₹

Amount returned

₹

Time period

Amount Invested₹50,000

Amount Returned₹80,000

Investment Gain₹30,000

Total ROI60%

Annualized ROI (p.a)9.86% / yr

Year-by-Year Compounding Growth Schedule (5 Years)

What is Return on Investment (ROI)?

ROI stands for Return on Investment. It is a universal financial metric used to evaluate the efficiency and profitability of an investment relative to its initial cost. ROI answers the fundamental question: how much money did you make or lose compared to what you put in?

ROI Calculation Formula

The simple Return on Investment formula is:

ROI = [(Final Value - Initial Investment) / Initial Investment] × 100

For example, if you invested ₹50,000 and received ₹80,000 back, your net gain is ₹30,000. Your simple ROI is: (₹30,000 / ₹50,000) × 100 = 60%.

Annualized ROI (CAGR) Formula

Simple ROI ignores how many years an asset took to deliver returns. Annualized ROI (or Compound Annual Growth Rate) adjusts the return for holding duration:

Annualized ROI = [ (Final Value / Initial Investment)^(1 / n) - 1 ] × 100

Where n is the time period in years. Holding an investment for 5 years that generates a 60% total ROI yields an annualized return of 9.86% per year.

Simple Percentage Comparison

Quickly compare the performance of stocks, mutual funds, real estate, or business projects using a single unified metric.

Time-Adjusted Insights

Annualized ROI accounts for the holding duration to reveal whether a long-term investment truly outperformed inflation and benchmarks.

Gain & Loss Assessment

Accurately captures both positive profits and negative drawdown losses to measure downside risk.

Zero Guesswork

Instantly compute complex exponential roots and percentage returns without manual math errors.

Dailytrades Pro Tip: Simple ROI vs Annualized Return

A 100% simple return sounds amazing, but if it took 10 years to achieve, the annualized return is only ~7.18% p.a. Always examine the Annualized ROI when evaluating long-term assets against equity indices or Fixed Deposits!

Frequently Asked Questions (FAQs)

A 'good' ROI depends on the asset class and risk profile. Historically, Indian equity mutual funds and benchmark indices deliver 12% to 15% annualized ROI over 5+ year horizons, while debt and fixed income instruments typically generate 6% to 8% annualized returns.