What is annualized ROI?

Annualized ROI (CAGR) accounts for the time period. Formula: ((Final Value / Initial Value)^(1/years) - 1) × 100. Example: 30% ROI over 3 years = ((1.30)^(1/3) - 1) × 100 = 9.14% per year. This is more useful for comparing investments held for different time periods.

A 'good' ROI depends on context. Stock market average: ~10% per year (historical S&P 500). Real estate: 7-12% annually. Bank FD (India): 6-7%. Equity mutual funds: 12-15%. Business investments: 20%+ typically expected. Always compare ROI to the risk-free rate (bank deposit rate) as a baseline.

📈 Investment Calculator

ROI Calculator

Calculate return on investment, net profit and annualized ROI. Compare against benchmarks and see a full investment breakdown.

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Return on Investment (ROI) —

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📊 How does your ROI compare?

📝 Calculation breakdown

ROI formulas explained

ROI (Return on Investment) measures the efficiency of an investment. Higher ROI = better return per rupee/dollar invested. Always compare ROI with the risk taken — a 10% ROI on a fixed deposit is better risk-adjusted than 10% on volatile stocks.

📊 Simple ROI

ROI = (Net Profit ÷ Cost) × 100. Net Profit = Final Value − Initial Investment. Example: invest ₹1 lakh, get ₹1.3 lakh → ROI = (30,000 ÷ 1,00,000) × 100 = 30%. Simple but doesn't account for time.

📅 Annualized ROI (CAGR)

CAGR = ((Final/Initial)^(1/years) − 1) × 100. Example: 80% ROI over 5 years = ((1.80)^(1/5) − 1) × 100 = 12.47%/year. CAGR is more useful for comparing investments held for different durations.

💡 Real ROI (inflation-adjusted)

Real ROI = ((1 + nominal ROI) ÷ (1 + inflation)) − 1. If your investment earned 12% but inflation was 6%, real return = (1.12/1.06)−1 = 5.66%. Your actual purchasing power increased by 5.66%, not 12%.

⚠️ What ROI misses

ROI ignores: risk (volatility), liquidity (how easily you can exit), taxes (LTCG/STCG), and opportunity cost (what else could you have done with the money). Always consider these alongside the ROI number.

Frequently asked questions

What is a good ROI in India?

Depends on the asset: Bank FD = 6-7% (safe). PPF = 7.1% (tax-free, government-backed). Gold = 8-10% (historical average). Equity mutual funds = 12-15% (long-term historical). Real estate = 8-12%. Direct stocks = varies widely. Always compare to FD rate as your minimum baseline — any investment with more risk should give significantly higher ROI.

What is the difference between ROI and CAGR?

ROI is the total return — it doesn't consider time. If you doubled your money in 1 year or 10 years, simple ROI = 100% in both cases. CAGR (Compound Annual Growth Rate) = Annualized ROI — it accounts for the time period. Doubling in 1 year = 100% CAGR. Doubling in 10 years = 7.18% CAGR. CAGR is almost always more useful for investment comparisons.

How do I calculate ROI for a business investment?

For business: ROI = (Net Profit from Investment ÷ Cost of Investment) × 100. Net profit = Revenue generated − All costs related to the investment (salaries, equipment, marketing, etc.). Example: spend ₹5 lakh on a machine, it generates ₹8 lakh revenue, operating costs ₹2 lakh → Net profit = ₹1 lakh → ROI = (1,00,000 ÷ 5,00,000) × 100 = 20%.