ROI Calculator

ROI — The Most Misused Metric in Finance

ROI is everywhere — marketing decks, investment pitches, business reports. But most people compute it wrong. They forget to include the cost of capital, ignore the time taken, or mix up gross and net figures. Return on Investment = (Net Profit / Cost of Investment) × 100. Net profit is what you receive minus everything you spent, including fees, taxes and the opportunity cost of your money sitting in this investment rather than elsewhere.

Simple ROI vs Annualised ROI — Why Both Matter

Imagine two investments: Investment A returned 60% over 2 years. Investment B returned 60% over 6 years. Same ROI — but A is obviously far superior. Annualised ROI (equivalent to CAGR) corrects this: A gives 26.5% p.a., B gives only 8.2% p.a. This calculator shows both. Always use annualised ROI when comparing investments that ran for different durations — simple ROI alone is a dangerously incomplete picture. See our CAGR Calculator for more on annualised returns.

ROI Benchmarks Across Asset Classes (India, 2024)

• Nifty 50 Index Fund (10-year): ~13–14% annualised
• Mid/small cap funds (10-year): ~15–20% with higher volatility
• Residential real estate (metro): ~8–12% including rental yield
• Fixed Deposits (5-year): ~6.5–7.5% (taxable at slab rate)
• Digital marketing campaigns: 200–500% ROI considered strong
• Small business (retail/services): 15–30% ROI on capital deployed

Five Things ROI Does Not Account For

1. Risk: A 20% ROI from a startup and 20% from a blue-chip stock are not equal. 2. Liquidity: Real estate ROI looks great on paper but your money is locked. 3. Inflation: A 7% ROI when inflation runs at 6% is only 1% real return. 4. Tax: LTCG at 12.5% versus income tax at 30% produces very different post-tax ROI from the same investment. 5. Intermediate cash flows: Dividends or partial returns reinvested elsewhere affect your true total return. Use our Compound Interest Calculator to model reinvestment scenarios.

When a Good ROI is Actually a Bad Deal

If you borrow at 14% to fund an investment that returns 12% ROI, you are losing 2% on every rupee. Always compare your ROI against the cost of capital — the rate you pay for the money you invested. Any ROI below your borrowing rate is a net loss. Any ROI below the risk-free rate (typically PPF or 10-year G-Sec yield, currently ~7%) means you are being under-compensated for the risk you are taking.

✓Verified by ToollyX Team · Last updated June 2026