Rate of Return Calculator India

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Rate of Return Calculator (India)

Total Profit/Loss
₹0
Absolute Return
0%
Annualized Return (CAGR)
0%

Understanding Rate of Return in India

Whether you are investing in the Indian stock market (NSE/BSE), Mutual Funds, Real Estate, or Fixed Deposits, understanding your Rate of Return (RoR) is crucial for wealth management. It tells you how much your money has grown relative to the initial amount invested, after accounting for time and costs.

Absolute Return vs. CAGR

In the Indian financial context, two types of returns are commonly discussed:

  • Absolute Return: This is the simple percentage increase or decrease in your investment. It does not take into account the time it took to achieve those returns. It is useful for short-term investments (less than 1 year).
  • CAGR (Compounded Annual Growth Rate): This represents the mean annual growth rate of an investment over a specified period of time longer than one year. It is the most accurate way to compare the performance of different asset classes like Equity vs Gold in India.

How to Calculate Rate of Return

The formulas used by our calculator are:

Absolute Return Formula:
((Final Value - Initial Investment) / Initial Investment) * 100

CAGR Formula:
[(Final Value / Initial Investment) ^ (1 / Years) - 1] * 100

Example Calculation

Suppose an investor in Mumbai invested ₹5,00,000 in a Diversified Equity Mutual Fund. After 5 years, the value of the investment grew to ₹9,00,000.

Metric Value
Initial Investment ₹5,00,000
Final Value ₹9,00,000
Duration 5 Years
Absolute Return 80%
CAGR (Annualized) 12.47%

Why CAGR Matters for Indian Investors

With India’s inflation usually hovering between 4% to 6%, looking at absolute returns can be misleading. A 50% return over 10 years might sound impressive, but it represents a CAGR of only 4.14%, which barely beats inflation. To truly build wealth in India, investors should aim for a CAGR that significantly exceeds the inflation rate and the “risk-free” rate offered by Post Office savings or Bank FDs.

function calculateROR() {
var initial = parseFloat(document.getElementById(‘ror_initial’).value);
var finalVal = parseFloat(document.getElementById(‘ror_final’).value);
var years = parseFloat(document.getElementById(‘ror_years’).value);
var costs = parseFloat(document.getElementById(‘ror_costs’).value) || 0;
if (isNaN(initial) || isNaN(finalVal) || isNaN(years) || initial <= 0 || years <= 0) {
alert("Please enter valid positive numbers for investment and duration.");
return;
}
// Adjusting final value for costs
var netFinal = finalVal – costs;
var profit = netFinal – initial;
// Absolute Return
var absoluteReturn = (profit / initial) * 100;
// CAGR Calculation
var cagr = (Math.pow((netFinal / initial), (1 / years)) – 1) * 100;
// Display Results
document.getElementById('ror_results').style.display = 'block';
document.getElementById('res_profit').innerText = '₹' + profit.toLocaleString('en-IN', {maximumFractionDigits: 2});
document.getElementById('res_absolute').innerText = absoluteReturn.toFixed(2) + '%';
document.getElementById('res_cagr').innerText = cagr.toFixed(2) + '%';
}

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