ROI Calculator – Return on Investment
The Return on Investment (ROI) Calculator is a financial tool designed to measure the profitability of an investment. It helps individuals and businesses evaluate the efficiency or potential return of a particular investment by comparing the gain from the investment to its cost. This tool is useful for assessing past investment performance or forecasting future gains.
ROI Formula & Explanation
Where:
- Net Profit = Final Value − Initial Investment
- Investment Cost = Initial Investment
🧠 What ROI Tells You
- It gives a quick, overall snapshot of how much you gained or lost from your investment.
- It doesn’t account for time duration.
📊 Example (ROI):
Aman had made an investment of ₹10,000 3 years ago and today after 3 years the final value of investment is ₹15,000 so the Net Profit is ₹5,000 and Return On Investment (ROI) as 50%
CAGR Formula & Explanation
Where:
- n = Number of years
- Initial Value = Starting investment
- Final Value = Ending value of investment
🧠 What CAGR Tells You
- It gives the annualized growth rate — how much your investment has grown per year on average.
- Unlike ROI, CAGR considers the time factor and shows compound growth.
📊 Example (CAGR):
So, continuing the above example Aman had made an investment of ₹10,000 3 years ago and today after 3 years the final value of investment is ₹15,000 so the Net Profit is ₹5,000 and Return On Investment (ROI) as 50% and CAGR comes out to be 14.47%
FAQs
What’s the difference between ROI and CAGR?
ROI gives total profit/loss over time, whereas CAGR shows how much the investment grew per year on average.
Is CAGR always lower than ROI?
Usually, yes — unless the investment period is exactly one year
Can I use both together?
Yes, using both provides a complete picture — ROI for total return, CAGR for annualized return.
Can CAGR be negative?
Yes, if the investment value decreased over time, the CAGR will be negative.
Can ROI be negative?
Yes, if your investment results in a loss, the ROI will be negative, indicating a poor performance.
What is ROI?
ROI stands for Return on Investment. It’s a percentage that shows how much profit or loss you’ve made on an investment relative to its cost.
What is CAGR?
CAGR stands for Compound Annual Growth Rate represents the yearly growth rate of an investment over a defined period, assuming the profits are reinvested each year.