ROI Calculator - Return on Investment Calculator (2024)

FAQs

How to compute ROI return of investment? ›

Return on investment (ROI) is an approximate measure of an investment's profitability. ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and finally, multiplying it by 100. ROI has a wide range of uses.

Average Rate of Return: This is more difficult to calculate because by their nature private equity firms and hedge don't always report their losses and earnings. However, most estimates suggest that you can expect average returns of up to 14%.

Assume a $10,000 investment grows to $12,000 over a five year period. To calculate the total return over the period, divide the ending value by the beginning value and then subtract one. [ (12,000/10,000) – 1 = 0.20 = 20% ] It might seem like a 20% return over five years would equate to a 4% annual return.

Return on investment (ROI) is calculated by dividing the profit earned on an investment by the cost of that investment. For instance, an investment with a profit of $100 and a cost of $100 would have an ROI of 1, or 100% when expressed as a percentage.

ROI = Investment Gain / Investment Base

The simplest way to think about the ROI formula is taking some type of “benefit” and dividing it by the “cost”. When someone says something has a good or bad ROI, it's important to ask them to clarify exactly how they measure it.

While quite a few personal finance pundits have suggested that a stock investor can expect a 12% annual return, when you incorporate the impact of volatility and inflation, 7% is a more accurate historical estimate for an aggressive investor (someone primarily invested in stocks), and 5% would be more appropriate for ...

How to turn $500,000 into $1,000,000? To turn $500,000 into $1,000,000, you need a sound investment strategy. Diversifying your investments across a mix of asset classes like stocks, bonds, and real estate can help.

You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate. For a rate of return of 5%, you'd need to save around $14,700 per month.

Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.

How much money do I need to invest to make $3,000 a month? ›

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

Stock exchange markets are considered inherently unstable and unpredictable, however, in the long run, they eventually tend to rise, and though a return as good as 15% each year might not always be achievable in the stock market, an annual return of around 15% may be possible over the foreseeable future, but remember, ...

To calculate the property's ROI: Divide the annual return by your original out-of-pocket expenses (the downpayment of $20,000, closing costs of $2,500, and remodeling for $9,000) to determine ROI. ROI = $5,016.84 ÷ $31,500 = 0.159. Your ROI is 15.9%.

Calculating ROI is simple, both on paper and in Excel. In Excel, you enter how much the investment made or lost and its initial cost in separate cells, then, in another cell, ask Excel to divide the two figures (=cellname/cellname) and give you a percentage.

Calculating Multi-Year Returns

As an example, if you made $10,000, $15,000 and $15,000 in three consecutive years, adding those figures produces a total return of $40,000. Dividing this total by your original investment and multiplying by 100 converts the figure into a percentage.

There must be two values that are known to calculate the rate of return; the current value of the investment and the original value. To calculate the rate of return subtract the original value from the current value, divide the difference by the original value, then multiply by 100.