ROI Calculator

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ROI Calculator – User Guide

What is ROI?

Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment. It directly measures the amount of return on a particular investment, relative to the investment’s cost.

ROI Formula

ROI = ((Returns - Investment) / Investment) × 100%

For example:

  • If you invest ₹1,00,000 and receive ₹1,50,000 in return
  • ROI = ((1,50,000 – 1,00,000) / 1,00,000) × 100%
  • ROI = 50%

How to Use the Calculator

Input Fields

  1. Initial Investment (₹)
  • Enter the amount you plan to invest or have invested
  • Example: ₹1,00,000
  1. Expected Returns (₹)
  • Enter the total amount you expect to receive
  • Include both your initial investment and profits
  • Example: ₹1,50,000 (if you expect ₹50,000 profit on ₹1,00,000 investment)
  1. Time Period (Years)
  • Enter the investment duration in years
  • Can include decimals (e.g., 1.5 for 18 months)
  • Example: 2 years

Understanding Results

  1. Total ROI
  • Shows overall return percentage
  • Higher percentage indicates better returns
  • Example: 50% means you earned half of your investment amount
  1. Annual ROI
  • ROI divided by number of years
  • Helps compare investments with different timeframes
  • Example: 25% per year for a 2-year investment with 50% total ROI
  1. Total Returns
  • Actual profit in rupees
  • Difference between expected returns and initial investment
  • Example: ₹50,000 (₹1,50,000 – ₹1,00,000)

Investment Growth Chart

  • Visual representation of your investment growth
  • X-axis shows years
  • Y-axis shows investment value
  • Helps visualize compound growth over time

Tips for Using the Calculator

  1. Real-Time Calculations
  • Results update automatically as you type
  • No need to click any buttons
  • All three fields must be filled for calculations
  1. Accuracy
  • Use realistic return expectations
  • Consider market conditions and investment type
  • Include all costs in your initial investment amount
  1. Comparing Investments
  • Use Annual ROI for comparing investments with different time periods
  • Higher Annual ROI generally indicates better investment efficiency

Important Notes

  1. Investment Considerations
  • ROI doesn’t account for risk factors
  • Consider inflation impact on returns
  • Past performance doesn’t guarantee future results
  1. Best Practices
  • Use conservative estimates for returns
  • Factor in all costs (fees, taxes, etc.)
  • Compare with risk-free investments like fixed deposits
  1. Limitations
  • Simple ROI doesn’t account for timing of cash flows
  • Doesn’t consider the complexity of some investment products
  • Best used as one of many decision-making tools

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