Question 1

How is ROI calculated?

Accepted Answer

ROI = [(Net Profit / Cost of Investment) × 100]. Net Profit = Final Value − Initial Investment. For example, investing ₹1,00,000 and getting ₹1,20,000 gives ROI = (20,000/1,00,000) × 100 = 20%.

Question 2

What is a good ROI?

Accepted Answer

A 'good' ROI depends on the investment type and risk. Stock market historically returns 10–15% annually. Real estate 8–12%. FDs 6–7%. Any ROI consistently above inflation (5–7%) is considered positive.

Question 3

What is the difference between ROI and CAGR?

Accepted Answer

ROI measures total return over the full period without considering time. CAGR (Compound Annual Growth Rate) normalizes returns to an annual rate, making it easier to compare investments of different durations.

Question 4

Can ROI be negative?

Accepted Answer

Yes, negative ROI means you lost money on the investment. ROI = −20% means you lost 20% of your invested capital. Analyzing both positive and negative ROI scenarios is essential for risk assessment.

Return on Investment Calculator