Return on Investment (ROI) Calculator
ROI is your profit divided by what you invested, expressed as a percentage: (final value − cost) ÷ cost × 100. Annualized ROI spreads that return over the years held — a 50% return over 5 years is about 8.4% a year, far weaker than the same 50% in 2 years.
verified_userReviewed by the Calculopedia editorial teamLast updated 2026-08-16
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quizExample
How this calculator works, with real numbers (no JavaScript needed):
Inputs
- Amount invested
- 100000
- Final value
- 150000
- Holding period
- 5
Results
- Total ROI
- 50%
- Profit
- ₹50,000
- Annualized ROI
- 8.5%
functionsThe formula
Return on Investment (ROI) answers a simple question: for every rupee I put in, how much did I get back? It is the most quoted number in finance because it is so easy to compute — and also the least comparable, because it ignores time, taxes, inflation and risk.
The formula
ROI = (final value − cost) ÷ cost × 100
Invest ₹1,00,000 and it is now worth ₹1,50,000:
ROI = (1,50,000 − 1,00,000) ÷ 1,00,000 × 100 = 50%
Annualized ROI — the honest comparison
The plain ROI doesn't say how long you held the investment. Annualized ROI spreads the return over the holding period so different investments can be compared fairly:
Annualized ROI = ((final value ÷ cost)^(1 ÷ years) − 1) × 100
That same 50% over 5 years:
((1.5)^(1/5) − 1) × 100 ≈ 8.4% per year
Example comparison
| Investment | Total ROI | Period | Annualized |
|---|---|---|---|
| Fixed deposit | 50% | 5 yrs | 8.4% |
| Stock | 50% | 2 yrs | 22.5% |
Same headline ROI — completely different performance. Always use annualized ROI for comparison. Note the stock doubling to a 22.5% annualized figure: the same 50% profit earned in two years is more than twice as good as earning it in five.
What a "good" ROI actually is
Judge returns against three yardsticks:
- Inflation — a 7% nominal return in a 6% inflation year is a ~1% real return. India's long-run inflation has averaged 5–7%, so anything below roughly 6% is losing purchasing power.
- Risk — an FD's 7% with zero downside and a stock's 12% with heavy volatility are not comparable returns; the difference is the price of risk, not pure outperformance.
- The alternative — if an index fund returned 12% a year over your holding period and your portfolio returned 9%, your real underperformance is the gap. ROI should be compared against a benchmark, not against zero.
Where ROI misleads
- Too good to be true — a 300% "ROI in 6 months" is either fraud or leverage. Margin/large-gamble schemes concentrate gains onto a small base, inflating ROI; always ask "ROI on what custodied asset, at what risk, net of what fees?"
- Timing games — money added or withdrawn mid-period distorts a simple ROI. If you added more capital later, the 50% on the final cost figure is not really "what this investment did."
- Entry and exit — taxes on redemptions (and LTCG) reduce the realised return; ROI before tax overstates what lands in your account.
- Lump sum vs SIP — a SIP averaging into a falling or rising market yields a different (often better or worse) realized ROI than a lump-sum ROI on the same fund; the two aren't apples to apples.
Real-world guideline
For long-term Indian equity, a reasonable planning assumption is roughly 8–10% annualized; RDs/FDs sit around 5–7%; and any investment promising consistent double-digit annualized returns with no volatility deserves heavy scepticism. Compare any candidate against these bands before committing.
ROI ignores taxes, inflation and risk. Pair it with annualized return and a risk check for a full picture.
helpFrequently asked questions
question_markHow do I calculate return on investment?
Divide your profit by the amount invested and multiply by 100: ROI = (final value − cost) ÷ cost × 100. For time comparisons, use annualized ROI = ((final ÷ cost)^(1/years) − 1) × 100.
question_markWhat is the difference between ROI and annualized ROI?
ROI is the total return over the whole holding period. Annualized ROI is the average yearly return, which lets you compare investments held for different lengths of time.
question_markWhat is a good ROI?
It depends on risk and time frame. Historically, broad stock markets have returned roughly 8–10% per year. Any return should be judged against inflation and the risk taken.