ROI Calculator: Your Comprehensive Guide to Return on Investment Analysis
Accurately calculate ROI for any investment using our ROI Calculator. Explore advanced ROI formulas, annualized returns, risk-adjusted metrics, and learn how to compare performance across different assets. This tool helps you make more informed investment decisions.
Understanding ROI
Return on Investment (ROI) measures efficiency and has been important since DuPont's 1919 formula development. It’s vital for comparing stocks (averaging 15%), real estate (7-10%), and volatile crypto assets (ranging from 50% to 200%).
Fundamental ROI Formula
ROI = [(Gain - Cost) / Cost] × 100
- Gain: Includes final value plus income
- Cost: Initial investment plus any fees
Practical Examples
Example 1: Stock Investment
Invested ₹50,000 with ₹2,000 in brokerage fees
Sold for ₹75,000 after 2 years
ROI = [(75,000 - 52,000) / 52,000] × 100 = 44.23%
Example 2: Rental Property
Purchased for $300k, earning $15k annually, sold for $400k after 5 years
Total Gain = (400k - 300k) + (15k × 5) = $175k
ROI = (175k / 300k) × 100 = 58.33%
Advanced ROI Metrics
- Annualized ROI = [(1 + ROI)^(1/n) - 1] × 100
- Risk-Adjusted ROI (Sharpe Ratio)
- Marketing ROI (ROMI)
- Social Return on Investment (SROI)
Common Mistakes in Calculations
- Ignoring transaction costs and taxes
- Mixing nominal and real returns
- Overlooking the time value of money
- Comparing investments of unequal duration