Educational Purpose Only: This calculator provides estimates for informational purposes. Results are not professional financial advice.
What is ROI and how is it calculated?
Return on Investment (ROI) measures the profitability of an investment relative to its cost. It is expressed as a percentage and tells you how much you gained (or lost) for every rupee invested. ROI is one of the most widely used financial metrics because it is simple, universal, and makes it easy to compare vastly different types of investments — stocks, real estate, a business, or even a marketing campaign.
If you also provide the holding period, the calculator computes the annualized ROI (CAGR) — the equivalent yearly growth rate that would produce the same final value. This is more meaningful for comparing investments held for different durations.
For example, if you invested ₹50,000 and it grew to ₹80,000 over 4 years: ROI = 60%, CAGR = (80,000/50,000)^(1/4) − 1 = 12.47% per year.
How to use this calculator
- Initial Investment: Enter the amount you originally invested or spent.
- Final Value: Enter the current value or the amount you received at exit.
- Duration (optional): Enter the holding period in years to see the annualized ROI (CAGR) alongside the simple ROI.
- The calculator shows your absolute gain/loss, ROI %, and (if duration is entered) the annualized CAGR.
Typical ROI benchmarks by asset class
Equity Mutual Funds
Large-cap equity funds have historically delivered 11–13% CAGR over 10-year periods. Mid and small-cap funds can exceed 15% over the long term but with significantly higher volatility.
Real Estate
Residential property in Indian metros has delivered 7–10% CAGR over the last decade. Rental yield adds 2–3% annually. Location and timing heavily influence actual returns.
Fixed Deposits & Debt
Bank FDs currently offer 6.5–7.5% per annum. Post-tax ROI (for those in the 30% slab) drops to approximately 4.5–5.25% — close to or below inflation.
Gold
Gold has delivered approximately 10–11% CAGR in rupee terms over the last 20 years, driven partly by INR depreciation. It acts as a portfolio hedge rather than a primary growth asset.
ROI vs CAGR — key difference
Simple ROI tells you the total percentage gain or loss over the entire holding period, regardless of how long it took. CAGR normalises this to an annual rate, making it easy to compare investments held for different durations. For example, a 50% ROI over 10 years sounds impressive but translates to only about 4.1% CAGR — lower than a fixed deposit. The same 50% ROI achieved in 2 years equals 22.5% CAGR — exceptional performance.
Always use CAGR when comparing two investments held for different periods. Use simple ROI when you just need to know the total gain on a single transaction.
Frequently Asked Questions
What is a good ROI?
A 'good' ROI depends on the investment type and time horizon. For equity investments in India, a long-term ROI equivalent to 12–15% CAGR is considered excellent. Real estate typically delivers 7–10% CAGR. A fixed deposit gives about 7% CAGR. Always compare ROI against inflation (currently ~6%) — an ROI below inflation means negative real returns.
What is the difference between ROI and CAGR?
ROI is the total percentage gain or loss over the entire holding period, regardless of how long. CAGR (Compound Annual Growth Rate) normalises the ROI to a per-year figure, making it easy to compare investments held for different periods. A 50% ROI over 5 years equals 8.45% CAGR, while 50% over 2 years equals 22.5% CAGR — vastly different rates of return.
How is ROI used in business?
In business, ROI measures the efficiency of spending. Marketing ROI shows revenue generated per rupee spent on campaigns. Capital expenditure ROI measures returns on equipment or facility investments. A positive ROI means the investment earned more than it cost; the higher the ROI, the better the use of capital.
Does ROI account for taxes and inflation?
Simple ROI does not account for taxes or inflation. For a true measure of wealth creation, use real ROI = (Nominal ROI − Inflation Rate) / (1 + Inflation Rate). For post-tax ROI, deduct capital gains tax (STCG at 20% or LTCG at 12.5%) before calculating the final return percentage.
Related Calculators
This calculator is for educational purposes only. Past returns do not guarantee future performance.
About ROI Calculator
Measure your return on investment as a percentage of the initial amount. Optionally enter the holding period to also see the annualized ROI (CAGR). This tool is designed to be simple and accessible for users who need quick, reliable results.
When to use this tool
Use the roi calculator when you need an accurate, immediate calculation without installing software or registering an account. It is especially useful for everyday decisions, quick comparisons, and planning where you need numbers fast.
How it works
The calculator applies standard, well-known formulas and conventions appropriate to the domain. Results are computed instantly in your browser to preserve privacy and avoid sending personal data to servers.
Limitations and tips
This tool provides informative estimates and is not a substitute for professional advice. For complex or high-stakes decisions, verify results with a qualified professional. Double-check inputs such as units, dates, and currency settings before making decisions.