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ROI Calculator

Calculate Return on Investment for any investment

๐Ÿ‡ฎ๐Ÿ‡ณ Indian Rupee (โ‚น)
Initial Investment
โ‚น
Final Value
โ‚น
Investment Period 2 Yrs
Years
Total ROI
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-
Net Profit
-
CAGR
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Annual Return

What is ROI and Why Does it Matter?

ROI โ€” Return on Investment โ€” is probably the most universally used metric in finance and business. It answers one simple question: for every rupee you put in, how much did you get back? Whether you are evaluating a stock market investment, a business decision, a marketing campaign, or even a real estate purchase โ€” ROI helps you compare apples to apples.

The beauty of ROI is its simplicity. A โ‚น10 lakh investment that becomes โ‚น15 lakh has the same ROI (50%) whether it took 1 year or 3 years โ€” but clearly the one that did it in 1 year is better. Thats why CAGR (Compounded Annual Growth Rate) is often used alongside ROI to account for time.

ROI Formula and Calculation

ROI = (Final Value - Initial Investment) / Initial Investment ร— 100 CAGR = [(Final Value / Initial Value)^(1/Years) - 1] ร— 100

Example 1 โ€” Simple ROI:
You bought stocks worth โ‚น2,00,000. After selling, you received โ‚น2,80,000.
ROI = (2,80,000 - 2,00,000) / 2,00,000 ร— 100 = 40%

Example 2 โ€” CAGR matters too:
Investment A: โ‚น1 lakh โ†’ โ‚น1.5 lakh in 2 years. ROI = 50%, CAGR = 22.47%
Investment B: โ‚น1 lakh โ†’ โ‚น1.5 lakh in 5 years. ROI = 50%, CAGR = 8.45%
Same ROI, very different CAGR. Investment A is clearly superior.

What is a Good ROI?

This depends entirely on the type of investment and time period:

Stock market (Nifty 50): Long term historical CAGR is around 12โ€“14% in India. Any investment beating this consistently is doing very well.

Real estate: Major city real estate has historically given 8โ€“12% CAGR including rental income. Tier 2 cities vary widely.

Fixed deposits: Currently 6.5โ€“7.5%. Safe but relatively low ROI, especially after taxes.

Business investment: A good small business should target at least 20โ€“25% ROI. Below 15% and you might as well invest in safer instruments.

Always calculate ROI after accounting for taxes, fees, and inflation to get the real return.

Common ROI Mistakes People Make

Not accounting for time: Comparing a 1-year return with a 5-year return without annualising is misleading. Always use CAGR for fair comparisons across different time periods.

Ignoring costs: Brokerage, STT, exit loads, taxes on gains โ€” these reduce actual ROI. A 15% gross return might be only 11% net of all costs and taxes.

Survivorship bias: When you read that this stock gave 300% ROI in 3 years, remember you are only hearing about the winners. Many stocks that failed to perform are not talked about. Evaluate expected ROI considering both upside and downside scenarios.

FAQs

How is ROI different from returns?
Returns and ROI are often used interchangeably but technically, ROI is expressed as a percentage of the original investment, while returns can be expressed in absolute rupee terms or percentage. CAGR is annualised ROI, making it more useful for comparing investments held over different time periods. All three tell you how well an investment performed, just from slightly different angles.
Can ROI be negative?
Yes, if the final value is less than the initial investment, ROI is negative. Example: Bought shares for โ‚น50,000, current value โ‚น38,000. ROI = (38,000 - 50,000) / 50,000 ร— 100 = -24%. Negative ROI means you have lost money on the investment. This is common in short term stock market investments and is why time horizon matters so much.
What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut. Divide 72 by the annual interest rate to roughly find how many years it takes for money to double. Example: At 9% returns, money doubles in 72/9 = 8 years. At 12%, it doubles in 6 years. At 6%, it takes 12 years. Its not perfectly accurate but a very handy approximation for quick calculations.