ROI Calculator
📊 Methodology: This calculator uses standard financial formulas. Results are estimates for planning purposes only. Consult a qualified financial advisor before making financial decisions.
What is ROI?
Return on Investment (ROI) is a performance metric that measures the efficiency of an investment relative to its cost. It expresses the net gain or loss as a percentage of the original amount invested. ROI is used to compare the profitability of different investments, assess project performance, and justify business expenditures. Related: use the Investment Calculator to go further, or the SIP Calculator for a different angle.
ROI Formula: ROI = (Net Gain ÷ Cost of Investment) × 100
Net Gain = Final Value + Income − Initial Investment
Annualised ROI (CAGR) = (Final Value / Initial Value)^(1/Years) − 1
Example: Invest $10,000. After 3 years, worth $14,500 plus $500 in dividends. Net gain = $5,000. ROI = $5,000/$10,000 = 50%. Annualised ROI = (15,000/10,000)^(1/3) − 1 = 14.5% per year.
ROI vs CAGR — which should you use?
Simple ROI does not account for time — a 50% ROI over 10 years is much less impressive than 50% ROI over 2 years. CAGR (Compound Annual Growth Rate) is the annualised version that makes investments over different time periods directly comparable. Use CAGR for any investment held longer than 1 year.
ROI benchmarks across asset classes (historical averages)
| Asset Class | Historical Annual Return |
|---|---|
| US Stock Market (S&P 500) | 10–11% |
| Indian Equity (Nifty 50) | 12–14% |
| Global Real Estate | 6–9% |
| Gold | 7–8% |
| Government Bonds (US 10yr) | 4–5% |
| Savings Account | 3–5% |
| Fixed Deposit (India) | 6.5–7.5% |
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial advice. Results may vary based on actual rates, fees, and conditions. Always consult a qualified financial advisor or official government resources before making financial decisions. View our calculation methodology.
Frequently asked questions about ROI
What is a good ROI? A good ROI depends on the asset class and risk involved. For stocks, beating the market return (10–11% annually for S&P 500) is considered good. For a business investment, 20–30% annual ROI is excellent. For real estate, a 6–10% annual return is typical. Higher risk investments should deliver higher ROI to justify the risk taken.
How is ROI different from profit margin? Profit margin measures profitability relative to revenue. ROI measures return relative to the capital invested. A business can have high profit margins but low ROI if it requires very large capital investment to generate that profit.
Should I include taxes in ROI calculation? For investment decisions, always use after-tax ROI. Capital gains tax, dividend tax, and rental income tax significantly reduce real returns. The net after-tax return is what you actually take home.
Sources & References
- SEBI — Return Calculation Standards — XIRR and annualised-return disclosure norms for Indian investment products
- CFA Institute — Investment Performance Standards — Global Investment Performance Standards (GIPS) — ROI methodology
What is historical ROI by asset class (approximate 20-year averages)?
| Asset Class | Average Annual Return | Risk Level | Liquidity |
|---|---|---|---|
| US S&P 500 (equities) | 10–11% | High | Very high |
| Nifty 50 (India equities) | 12–14% | High | Very high |
| Global bonds | 3–5% | Low | High |
| Indian FD (Fixed Deposit) | 6.5–8.5% | Very low | Low (lock-in) |
| Real estate (US average) | 4–6% (excl. rental yield) | Medium | Very low |
| Real estate (India urban) | 6–10% (excl. rental) | Medium | Very low |
| Gold | 6–8% | Medium | High |
| PPF (India) | 7.1% (government set) | Very low | Very low (15yr lock) |
| Cryptocurrency (BTC) | Highly variable | Extreme | High |
| Savings account (US HYSA) | 4–5% | Very low | Very high |
ROI vs CAGR vs IRR vs XIRR — which metric to use
| Metric | Best Used For | Formula | Limitation |
|---|---|---|---|
| ROI % | Simple total return comparison | (Gain ÷ Cost) × 100 | Ignores time — a 100% ROI over 1 year ≠ 100% over 10 years |
| CAGR | Single investment, fixed period | (End/Start)^(1/years) − 1 | Assumes no intermediate cash flows |
| IRR | Multiple cash flows (real estate, business) | Rate that makes NPV = 0 | Complex calculation; multiple solutions possible |
| XIRR | Irregular-interval cash flows (SIP, dividends) | IRR with specific dates | Requires exact dates of each cash flow |
ROI vs CAGR vs IRR: which return metric to use when
ROI (Return on Investment) is simple but ignores time — 100% ROI over 1 year is very different from 100% over 10 years. CAGR and IRR account for the time dimension:
| Metric | Formula | Use When | Limitation |
|---|---|---|---|
| ROI | (Gain − Cost) ÷ Cost × 100 | Simple one-time investment comparison | Ignores time; useless for different holding periods |
| CAGR | (End ÷ Start)^(1/years) − 1 | Comparing investments over different periods | Ignores interim cash flows |
| IRR | Rate that makes NPV = 0 | Projects with multiple cash flows | Complex; can have multiple solutions |
| Absolute return | (Current NAV − Invested) ÷ Invested | Mutual fund point-to-point return | Identical to ROI; time-blind |
India example: A mutual fund shows "150% absolute return since 2016." Sounds impressive — but over 10 years, CAGR = (2.5)^(1/10) − 1 = 9.6% annually. A Nifty 50 index fund gave ≈12% CAGR in the same period — the active fund underperformed. Always convert absolute returns to CAGR before comparing. Related: Investment Calculator · SIP Calculator
ROI calculation in Indian real estate
Real estate ROI must account for rental income AND capital appreciation MINUS all costs. Hidden costs to include: registration (5–7% of value), GST on under-construction (5%), stamp duty (5–8%), maintenance (₹3–5/sq ft/month), property tax, broker fees (1–2% on sale). A ₹60L flat bought in 2018 selling for ₹90L in 2024: apparent gain = ₹30L (50%). After subtracting ₹6L registration + ₹1.5L annual maintenance (6 years = ₹9L) + ₹1.8L property tax + ₹1.8L brokerage: net gain ≈ ₹11.4L. CAGR ≈ 2.8% — below FD rates.
What ROI should Indian investors actually expect?
Benchmarks from the last two decades of Indian markets give context for reading your ROI results: Nifty 50 total returns have averaged 12–14% CAGR over 15+ year windows; residential real estate in major metros 6–9% (before maintenance and taxes); gold roughly 9–10% in rupee terms; bank FDs 6–8%; and PPF 7–8.8% across rate cycles. Any pitch promising materially more than these — the 24% "assured" schemes that periodically surface — deserves the scepticism SEBI’s investor alerts repeatedly urge.
Always distinguish absolute ROI from annualised CAGR: a property bought at ₹40 lakh and sold at ₹80 lakh shows a flashy 100% ROI, but over 12 years that is just 5.95% CAGR — below an FD, before stamp duty, registration, brokerage, and capital gains tax. This calculator’s CAGR output is the honest number for comparing investments of different durations.
Post-tax matters too: equity LTCG above ₹1.25 lakh is taxed at 12.5%, property gains at 12.5% without indexation (or 20% with, for older purchases), and FD interest at your slab. A 9% pre-tax FD return for a 30% slab payer is a 6.2% real ROI — run your comparisons on after-tax numbers.