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Investment ROI Calculator

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Total Profit: $0.00

Total ROI (%): 0.00%

Annualized ROI (%): 0.00%

function calculateROI() { var initialInvestment = parseFloat(document.getElementById("initialInvestment").value); var finalValue = parseFloat(document.getElementById("finalValue").value); var investmentDuration = parseFloat(document.getElementById("investmentDuration").value); var totalProfit = 0; var totalROI = 0; var annualizedROI = 0; if (isNaN(initialInvestment) || isNaN(finalValue) || isNaN(investmentDuration) || initialInvestment <= 0 || investmentDuration <= 0) { alert("Please enter valid positive numbers for all fields."); return; } totalProfit = finalValue – initialInvestment; totalROI = (totalProfit / initialInvestment) * 100; annualizedROI = Math.pow((finalValue / initialInvestment), (1 / investmentDuration)) – 1; annualizedROI = annualizedROI * 100; document.getElementById("totalProfit").textContent = "$" + totalProfit.toFixed(2); document.getElementById("totalROI").textContent = totalROI.toFixed(2) + "%"; document.getElementById("annualizedROI").textContent = annualizedROI.toFixed(2) + "%"; }

Understanding Investment Return on Investment (ROI)

Return on Investment (ROI) is a fundamental metric used to evaluate the profitability of an investment relative to its cost. It's a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.

The basic formula for ROI is: 

            ROI = ( (Final Value - Initial Investment) / Initial Investment ) * 100%

In this calculator:

  • Initial Investment: This is the amount of money you initially put into the investment. For example, if you bought 100 shares of stock at $10 each, your initial investment would be $1000.
  • Final Value: This is the current market value of your investment, or the amount you sold it for. If those 100 shares are now worth $15 each, your final value is $1500.
  • Investment Duration: This is the length of time you held the investment, measured in years. In our example, if you held the stock for 5 years, the duration is 5.

Key Metrics Calculated:

  • Total Profit: This is simply the Final Value minus the Initial Investment. It shows the absolute gain in currency. In our example, $1500 – $1000 = $500.
  • Total ROI (%): This expresses your total profit as a percentage of your initial investment. It gives you a clear picture of how much you've gained relative to what you put in. For our example: ($500 / $1000) * 100% = 50%.
  • Annualized ROI (%): This metric is crucial for comparing investments with different holding periods. It calculates the average annual rate of return, assuming the gains were compounded over the investment's life. This allows for a more standardized comparison. Using the example of $1000 growing to $1500 over 5 years, the annualized ROI is approximately 8.45%. This means that, on average, your investment grew by about 8.45% each year.

Understanding ROI helps investors make informed decisions about where to allocate their capital and to track the performance of their existing portfolios effectively.

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