Return on Investment is abbreviated as ROI. It is a term used to calculate the return on the investments that is the percentage of the profit on the investment made. It is a well-known term for investors. It can be applied for any kind of investment like real estate, stocks, mutual funds, deposits, etc. ROI uses a simple formula to calculate the profit percentage on investment and the investors can find the returns on the investment quickly and easily.
Investment Amount - This is the amount you have invested or planning to invest in an asset
Investment Returns - This is the amount you have got at the end of the tenure or when you close the investment
Investment Period - The number of years your investment amount is made fo
Gain on Investment - The gain on the investment is the extra amount you have gained apart from the investment amount
Loss on Investment - The amount you’ve lost on the investment amount
Annual Growth Rate - Annual Growth Rate gives the estimate of the investment amount growth per year according to the investment period. It is compounded annually.
An ROI calculator helps an investor understand the profits of the investment made and plan the investments accordingly. ROI calculator determines the returns on investments made irrespective of the tenure. You can also do a manual ROI calculation using the ROI formula.
The basic ROI formula is,
ROI = Investment Returns - Amount Invested / Amount Invested
For example, If you have invested an amount of AED 10,000 and at the end of 5 years Investment period you have returns of AED 50,000 then
ROI = 50,000-10,000/10,000
Hence the ROI is 400%.
When the ROI Calculation gives a positive figure then the investment is considered as Profit. If it yields a negative figure then the investment is considered a Loss. For ROI Calculation you need to have the Investment Amount and Investment Returns. Through these two figures, you can calculate the Return on Investments easily. Return on Investments can be calculated by using the ROI formula or ROI Calculator.