ROI (Return on Investment) is a performance metric that measures the efficiency or profitability of an investment relative to its cost. It’s one of the most universally used financial metrics in both personal investing and business decision-making.
📐 ROI Formula
ROI = (Net Profit / Cost of Investment) × 100
Example: You invest ₹1,00,000 in stocks and sell them for ₹1,35,000. ROI = (35,000/1,00,000) × 100 = 35%.
📊 What is a Good ROI?
| Investment Type | Expected ROI (Annual) |
|---|---|
| Savings Account | 3–4% |
| Fixed Deposit | 6.5–9% |
| PPF | 7.1% |
| Equity Mutual Funds | 10–15% |
| Direct Stocks | Variable (15%+ for good picks) |
| Real Estate | 8–12% (including rental yield) |
💡 ROI Limitations to Know
- ROI doesn’t account for time — 35% in 1 year is far better than 35% in 5 years. Use CAGR for time-adjusted comparison.
- Doesn’t factor in risk — a high ROI from a risky investment isn’t always better than a moderate ROI from a safe one
- Ignores taxes and inflation — always calculate real, post-tax ROI for accurate comparison
🧮 Calculate Your Investment ROI
Use our free ROI Calculator to measure the return on any investment. Compare multiple options and find what works best for your financial goals.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a qualified financial advisor for personalized guidance.
