ROI Calculator - Return on Investment Calculator

What is the ROI?

Return on Investment or ROI shows you the return from your investments. It helps you to choose the best investment across different investment options. You may evaluate the investment based on your financial goals and risk tolerance. You could also gauge the cost of your investment and look for hidden charges that could eat up your returns. The return on investment is usually expressed as a percentage. 

In simple terms, the return on investment is a financial ratio that helps you determine the benefit of your investment against the costs. You may calculate the return on investment using the formula: 

ROI = Net Profit / Cost of the investment * 100 

If you are an investor, the ROI shows you the profitability of your investments. If you invest your money in mutual funds, the return on investment shows you the gain from your mutual fund schemes. ROI may be positive or negative. If the return on investment is negative, you are actually losing money on the investment. You must pick an investment that may offer you the maximum return over a period.

What is an ROI Calculator?

The ROI calculator is a simulation that helps you gauge the profitability of your investments. You may use the ROI calculator to determine the return from investments across various periods. The ROI Calculator consists of a formula box, where you enter the initial amount invested, the amount returned, and the investment period. 

The ROI Calculator shows you the total gain on investment. It also shows you the absolute return on investment, annualised return on investment, and the CAGR or the compounded annual growth rate.

How does ROI Calculators work?

An ROI (Return on Investment) calculator is a financial tool that helps you measure the profitability of your investment. It calculates the percentage gain or loss relative to the money you invested, making it easier to understand the effectiveness of your spending.

How It Works

• Input Initial Investment Cost: The total amount of money spent on a project, campaign, or asset (in INR).
• Input Returns or Gains: The money earned or generated from the investment (in INR).
• Calculate Net Profit: Returns minus the initial investment.
• Calculate ROI: Divide net profit by the initial investment, then multiply by 100 to get a percentage.

Once you enter the inputs, the calculator automatically shows the output by using the following Formula:

ROI = (Net Profit ÷ Investment Cost) × 100

Where:

Net Profit = Returns − Investment Cost

Example:

Suppose you invested ₹50,000 in a social media marketing campaign for your business. After 3 months, the campaign generated ₹80,000 in sales directly attributable to it.

• Initial Investment Cost = ₹50,000
• Returns = ₹80,000

Step 1: Calculate Net Profit

Net Profit = 80,000−50,000 = ₹30,000

Step 2: Calculate ROI

ROI = (30,000 ÷ 50,000) × 100 = 60%

Your ROI is 60%, meaning for every ₹1 spent, you earn ₹0.60 as profit. This shows your investment was quite profitable.

How to use the ROI Calculator?

The ROI Calculator shows you the return on your investments. To use the ROI Calculator:

• You must enter the amount you have invested.
• Enter the amount returned.
• You then enter the holding period of the investment.
• The ROI Calculator shows you the gain on your investment. It also shows you the absolute return on your investment and the annualised return on the investment.

Benefits of Using ROI Calculator

• The ROI Calculator shows you the absolute return and the annualised return on the investment. You may calculate the return on your investment across different holding periods.
• The calculator helps you to pick the right investment based on your financial goals and risk tolerance.
• The calculator helps you select the best mutual funds based on the performance over different periods.
• You can measure the worth of the investment against the benchmark.
• You may measure the profit from the investment against the cost of the investment.