ROI Calculator – Measure Your Success
In the world of finance, numbers tell the story, and the most important number of all is the Return on Investment (ROI). It is the ultimate yardstick to measure the success or failure of any financial venture.
Our ROI Calculator is a powerful tool designed to give you instant clarity. Whether you are flipping a house, buying stocks, or running a marketing campaign, this calculator computes your total profit percentage and annualized return, helping you make data-driven decisions.
Why You Need to Calculate ROI
ROI isn't just a fancy acronym; it's a reality check for your money.
Compare Opportunities
Should you invest in Real Estate or the Stock Market? ROI standardizes the returns, allowing you to compare different asset classes on a level playing field.
Track Progress
For business owners, tracking ROI on various expenses (like ads or new equipment) helps identify what's working and what's a drain on resources.
The Time Factor
A 50% return sounds great, but not if it took 20 years to achieve. Our calculator provides the 'Annualized ROI', which factors in the time duration to give you the true rate of growth.
Exit Strategy
Knowing your current ROI helps you decide when to sell an asset. If the ROI has peaked and is starting to decline, it might be time to exit.
Frequently Asked Questions (FAQs)
How do I calculate Annualized ROI?
Annualized ROI = [(1 + Total ROI) ^ (1 / Number of Years)] - 1. This formula adjusts the total return to show the geometric average amount the investment grew each year.
What is a 'Good' ROI?
It depends on the risk. For a safe FD, 7% is good. For the stock market, 12-15% is considered good. For a high-risk startup, investors might expect an ROI of 30% or more. Context is key.
Can ROI be negative?
Yes. A negative ROI means you have lost money. If you invested ₹100 and the value is now ₹80, your ROI is -20%.
Does inflation affect ROI?
The standard calculation does not include inflation. However, to find the 'Real ROI', you should subtract the inflation rate from your nominal ROI. If your ROI is 8% and inflation is 6%, your real gain is only 2%.
Why is Annualized ROI important for short-term investments?
Actually, it can be misleading for very short terms. Annualizing a 10% return earned in 1 month would project a massive (and unrealistic) yearly return. It is best used for investments held for 1 year or more.