❓ Frequently Asked Questions – ROI Calculator
What is ROI and how is it calculated?
ROI (Return on Investment) is a percentage that measures how much profit or loss you made relative to the amount you invested. The formula is: ROI % = (Net Profit ÷ Initial Investment) × 100, where Net Profit = Final Value − Initial Investment − Additional Costs. For example, if you invest ₹1,00,000 and get back ₹1,30,000, your ROI = (30,000 ÷ 1,00,000) × 100 = 30%.
What is Annualized ROI and why is it important?
Simple ROI does not account for how long the investment was held. Annualized ROI (also called CAGR — Compound Annual Growth Rate) normalizes the return to a yearly rate. The formula is: Annualized ROI = ((Final Value ÷ Initial Value)^(1 ÷ Years) − 1) × 100. For example, a 50% total ROI over 4 years = 10.67% annualized — which is very different from 50% in 1 year. Always compare investments using Annualized ROI.
What is Break-Even Analysis?
Break-even analysis determines how many units you need to sell to cover all your costs (both fixed and variable) with zero profit or loss. Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit). The difference (Selling Price − Variable Cost) is called the Contribution Margin per unit. This tool also calculates how many months it would take to break even based on your expected monthly sales volume.
What is a good ROI?
A "good" ROI depends on the type of investment and industry. As a general benchmark: Risk-free investments like FDs or bonds typically offer 5-8% annually. Stock markets average 10-12% annually over the long term. Real estate averages 8-12% annually. A business investment is generally considered good at 15-30%+ annually. Any ROI above 20% per year is excellent, though higher returns typically come with higher risk.
How does the Investment Comparison mode work?
The Compare mode lets you add multiple investments and see all their ROI figures side by side. Add each investment with its name, initial cost, final value and duration. The calculator computes both simple ROI and annualized ROI for each, ranks them and highlights the best performer. This is useful when choosing between mutual funds, stocks, real estate options or business projects.