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ROI Calculator

Calculate Return on Investment percentage and annualised CAGR.

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What ROI tells you — and what it doesn’t

ROI is one of the most widely used financial metrics because it is simple and intuitive. But a raw ROI figure ignores time: a 50% return over 10 years is far less impressive than 50% in 2 years. That is why this calculator also computes the annualised ROI (CAGR) whenever you provide the holding period.

When to use ROI vs CAGR

  • Use ROI when comparing investments held for the same duration, or when time is not a factor (e.g., a single marketing campaign).
  • Use CAGR when comparing investments held for different periods, evaluating mutual fund performance, or setting long-term wealth targets.

Common pitfalls in ROI analysis

  • Ignoring transaction costs — brokerage, taxes, and fees can significantly erode returns, especially on short-term trades.
  • Survivorship bias — successful investments are remembered; failed ones are forgotten, making average reported ROIs misleadingly high.
  • Nominal vs real — always sanity-check nominal returns against inflation to see if purchasing power actually increased.

Frequently asked questions

What is ROI?
ROI (Return on Investment) measures the gain or loss generated relative to the amount invested. It is expressed as a percentage: ROI = (Net Profit ÷ Initial Investment) × 100. A positive ROI means you earned more than you invested; a negative ROI means a loss.
What is the difference between ROI and CAGR?
ROI tells you the total percentage return regardless of how long the investment was held. CAGR (Compound Annual Growth Rate) normalises that return into an equivalent annualised rate, making it easy to compare investments held for different time periods.
What is a good ROI?
There is no universal benchmark — it depends heavily on the asset class and risk level. Indian equity indices historically return 12–15% CAGR over long periods. Fixed deposits offer 6–8%. Real estate, business investments, and startups vary widely. Always compare ROI against the opportunity cost of the next best alternative.
How is annualised ROI calculated?
Annualised ROI (CAGR) = (Final Value ÷ Initial Investment)^(1 ÷ Years) − 1. For example, if ₹1,00,000 grew to ₹1,50,000 in 3 years, the CAGR is (1.5)^(1/3) − 1 ≈ 14.47% per year.
Does this calculator account for inflation?
No — the result is nominal ROI. To find the real (inflation-adjusted) ROI, use the formula: Real ROI = ((1 + Nominal ROI) ÷ (1 + Inflation Rate)) − 1. With Indian CPI inflation averaging ~5–6%, a nominal 12% return translates to roughly 5.7–6.6% real return.

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