Understanding your investment's Return on Investment (ROI) is crucial for evaluating its profitability. ROI is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI is typically expressed as a percentage and is calculated by dividing the net profit from an investment by its cost.
Your ROI: —%
function calculateROI() {
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
var currentValue = parseFloat(document.getElementById("currentValue").value);
var resultElement = document.getElementById("roiValue");
if (isNaN(initialInvestment) || isNaN(currentValue) || initialInvestment <= 0) {
resultElement.textContent = "Invalid input. Please enter valid positive numbers.";
return;
}
// Calculate the gain from investment
var gain = currentValue – initialInvestment;
// Calculate ROI
var roi = (gain / initialInvestment) * 100;
// Display the result, formatted to two decimal places
resultElement.textContent = roi.toFixed(2);
}
Understanding ROI
The Return on Investment (ROI) formula is straightforward:
ROI = ((Current Value of Investment – Cost of Investment) / Cost of Investment) * 100
In essence, it tells you how much profit (or loss) you've made relative to the money you initially put in. A positive ROI indicates that your investment has generated profit, while a negative ROI signifies a loss.
Example:
Let's say you invested $5,000 in a stock (Initial Investment Cost). After a year, the value of that stock has grown to $6,500 (Current Value of Investment).
Gain = $6,500 – $5,000 = $1,500
ROI = ($1,500 / $5,000) * 100 = 30%
This means your investment yielded a 30% return. This metric is invaluable for comparing different investment opportunities and understanding the performance of your portfolio.