Investment ROI Calculator
Calculate the Return on Investment (ROI) for your investments to understand profitability.
Results:
Total Profit:
ROI:
Understanding Return on Investment (ROI)
Return on Investment (ROI) is a performance measure used to evaluate the efficiency and profitability of an investment. It is a ratio that compares the gain or loss from an investment relative to its cost. In simpler terms, ROI tells you how much money you made (or lost) from your investment compared to how much you put in.
How to Calculate ROI:
The basic formula for ROI is:
ROI = [(Current Value – Initial Investment – Additional Investment + Withdrawals) / (Initial Investment + Additional Investment)] * 100
And the Total Profit is simply:
Total Profit = Current Value – Initial Investment – Additional Investment + Withdrawals
Why is ROI Important?
- Profitability Measurement: It's a straightforward way to gauge if an investment is profitable.
- Investment Comparison: ROI allows you to compare the performance of different investments on a level playing field.
- Decision Making: Helps in making informed decisions about where to allocate capital.
- Performance Tracking: Useful for tracking the progress of long-term investments.
Example:
Let's say you initially invested $10,000 in a stock. Over time, you added another $2,000 in additional investments. You also decided to withdraw $1,000. Currently, your investment is valued at $15,000.
- Initial Investment: $10,000
- Additional Investment: $2,000
- Withdrawals: $1,000
- Current Value: $15,000
Total Profit = $15,000 – $10,000 – $2,000 + $1,000 = $4,000
Total Invested = $10,000 + $2,000 = $12,000
ROI = [($4,000) / ($12,000)] * 100 = 33.33%
This means for every dollar invested, you made approximately $0.33 in profit.