ROI Calculator
Calculate the return on investment, net profit and annualised return for any investment or business expense.
The ROI calculator measures how profitable an investment was. ROI is simply the net gain divided by the cost, expressed as a percentage. Add the holding period to convert it into an annualised return, which makes very different investments comparable.
How to use the calculator
- Enter the amount invested — including fees if you want a net figure.
- Enter the value returned or the total you got back.
- Add the period to see the annualised return; use 1 year for a plain ROI.
- The result shows ROI, net profit and the yearly equivalent.
How it is calculated
Annualised return = (Final ÷ Cost)1/n − 1, where n is the number of years.
Worked example
₹1,00,000 invested, ₹1,40,000 returned after 2 years
ROI = 40,000 ÷ 1,00,000 = 40%
Annualised return = (1.4)1/2 − 1 ≈ 18.3% per year.
Who should use this calculator
- Business owners measuring whether an equipment purchase, a hire or an ad campaign paid for itself.
- Investors checking the return on a share, a property or a small business stake, including the holding period.
- Anyone comparing two opportunities where one is shorter but higher and the other longer but steadier.
- People evaluating whether a course, certification or a new machine earned back what it cost.
Common mistakes to avoid
- Leaving costs out of the invested amount. Brokerage, stamp duty, taxes, maintenance and repairs all reduce ROI. Including them gives you the number that actually matters.
- Comparing ROI over different periods. A 40% return over two years is about 18% a year, which is very different from 40% in one year. Annualise before you compare.
- Ignoring opportunity cost. Money tied up in one investment cannot earn elsewhere. The right comparison is against the return you could have earned on your next-best option.
- Confusing ROI with profit margin. A business can have a healthy margin and a poor ROI if the capital tied up is large.
- Measuring before tax. Returns are taxed at different rates depending on the asset and holding period, so post-tax ROI is the honest figure.
Total return versus annualised return
₹1,00,000 growing to ₹1,40,000 is a 40% return whether it takes two years or five. As a single number, ROI is useful for judging whether an investment worked at all. It is much less useful for comparing two investments, because the time taken is invisible in the figure.
That is what the annualised return solves. The same 40% over two years is about 18.3% a year, while over five years it is roughly 7% a year — a mediocre result. Whenever you compare opportunities of different lengths, convert both to an annual rate first. And if an investment is highly variable, remember that an annualised figure smooths out the swings you actually experienced.
ROI terms explained
- ROI
- Return on investment — net gain divided by the amount invested, expressed as a percentage.
- Annualised return
- The equivalent steady yearly return, which makes investments of different lengths comparable.
- Net profit
- Final value minus the amount invested, before or after tax depending on how you set it up.
- Opportunity cost
- The return you gave up by choosing one investment over the next best alternative.
- Money multiple
- How many times the money grew — a 2x multiple means the investment doubled.
Comparing a quick high return with a steady one
A 20% gain in six months annualises to roughly 44%, which looks spectacular next to a 14% yearly return — but the two are not comparable. Short bursts of high return usually come with high risk and rarely repeat at the same pace, so the annualised figure overstates what you can expect next year. The honest way to compare is to look at what each option has delivered over a full cycle, not over its best six months. When a return looks unusually good, ask what risk produced it: leverage, concentration in one stock, a single commodity cycle or a one-off event are all common explanations.
Frequently asked questions
What is a good ROI?
It depends on risk and the asset class. Over the long run, Indian equity indices have delivered around 12% a year, fixed deposits 6–7%, and real estate varies widely by location. Compare like-for-like and always adjust for inflation and taxes.
What is the difference between ROI and CAGR?
ROI is the total percentage gain over the whole period, while CAGR is the equivalent smooth annual rate. An ROI of 40% over two years is a CAGR of about 18.3%.
Should I include costs in ROI?
Yes, for a realistic picture. Add brokerage, stamp duty, taxes and maintenance to the invested amount, or subtract them from the final value, so your ROI reflects the actual money you made.