Investment ROI & CAGR Calculator

ROI = (Net Profit / Cost of Investment) × 100. Example: invest ₹2 lakh, sell for ₹2.6 lakh. Net profit = ₹60,000. ROI = (60000 / 200000) × 100 = 30%. That's the total return, not the annual return. If the investment took 3 years, the annualised ROI is much lower — about 9.14% per year. Always check whether a quoted ROI is total or annualised; the difference is huge over multiple years. ROI also doesn't include taxes, fees, or inflation. The calculator can show all three views: total, annualised, and inflation-adjusted.

ROI tells you total percentage gain over the holding period, regardless of how long it took. CAGR (compound annual growth rate) tells you the equivalent yearly return. Example: ₹1 lakh becomes ₹1.5 lakh in 5 years. ROI = 50%. CAGR = (1.5)^(1/5) − 1 = 8.45%. ROI overstates how good an investment was if the time period is long. CAGR is the fair comparison metric across investments of different durations. Always ask for CAGR when an advisor quotes a "great return." A 50% return sounds amazing till you realise it took a decade.

When cash flows are irregular, the simple ROI formula breaks down. Use IRR (internal rate of return) instead. IRR finds the discount rate that makes the net present value of all cash flows zero. Most spreadsheets have an IRR function — list each cash flow with its date, run =XIRR(values, dates) and you get the annualised return. This handles dividends, partial redemptions, and additional investments correctly. For SIP returns, XIRR is the right metric, not absolute ROI. The calculator supports XIRR for multiple cash flow scenarios.

A "good" ROI for a small business depends entirely on the industry and risk. As a rough benchmark, anything above 20% annualised on invested capital is considered strong; 10-15% is decent; below 8% is questionable since you can earn that risk-free in fixed deposits or government bonds. Service businesses often hit 25-40% ROI; manufacturing tends to be lower at 12-20%. Always compare to the risk-free rate (currently around 7% in India). If your business doesn't beat that by a meaningful margin, the risk isn't justified. Subtract your salary from profits before calculating true ROI.

Fees and taxes both eat into ROI directly. If your investment grows from ₹1 lakh to ₹1.5 lakh, gross ROI is 50%. Subtract a 2% transaction fee (₹3,000) and 10% LTCG tax on the ₹50,000 gain (₹5,000), and net gain is ₹42,000. Net ROI drops to 42%. Over long periods and recurring investments, this gap widens. Always calculate post-fee, post-tax ROI for an honest comparison. Mutual fund expense ratios, brokerage, STT, GST on services, and capital gains tax all add up. The calculator can include these inputs to show net ROI.

Annualised ROI = ((Final Value / Initial Value)^(1/years)) − 1. Example: ₹50,000 grows to ₹80,000 in 4 years. Annualised = (80000/50000)^(0.25) − 1 = (1.6)^(0.25) − 1 = 0.1247, or 12.47% per year. Total ROI is 60%, but annualised is the meaningful number for comparison. If your holding period is in months, use (1/years) where years is months/12. This is the same as CAGR. The calculator handles fractional years too. Always quote annualised ROI when comparing investments — it's the only fair common ground.

Yes, ROI can absolutely be negative — and it means the investment lost money. If you invest ₹1 lakh and sell for ₹85,000, ROI = (-15000/100000) × 100 = -15%. Stocks during a bear market, a failed business venture, or buying at peak and selling at trough all produce negative ROI. Negative ROI doesn't always mean a bad decision in hindsight — sometimes circumstances change. But persistent negative ROI is a warning to reassess strategy. Cut losses early when fundamentals deteriorate. The calculator shows positive and negative ROI honestly — don't ignore the red numbers.