Return on Investment (ROI) Calculator

Easily assess the returns on your investments

Updated on: Monday, April 1, 2024

Enter Total Amount Invested

Total Amount Returned

Duration of Investment



Use the Razorpay ROI Calculator to unlock the full potential of your financial decisions. This tool enables you to gauge the profitability of your investments, gain valuable insights and make informed financial choices.

Use the Razorpay ROI Calculator to unlock the full potential of your financial decisions. This tool enables you to gauge the profitability of your investments, gain valuable insights and make informed financial choices.

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What is ROI?

ROI stands for 'Return on Investment,' which is a financial metric used to measure the profitability or effectiveness of an investment. In simple terms, it tells you how much profit or value you gained (or lost) relative to the amount of money you initially invested.

You can calculate ROI using the simple formula, ROI = Net profit/Cost of investment * 100. If you are investing in property, then the return on investment will show you how profitable that investment is. If you are investing in the stock market, the ROI tells you how much you are gaining.

What is an ROI Calculator?

An ROI Calculator is a handy tool that figures out how much money you can make from a business choice. You put in costs and potential earnings, and it shows you the percentage or amount of profit you might get, helping you decide if it's a smart investment.

How to Calculate ROI using Razorpay ROI Calculator

  • Analyze Your Investment Gain: The Razorpay ROI Calculator will swiftly display the gain on your investment.

  • Calculate Absolute Return: The calculator will present the absolute return on your investment, providing valuable insights into its performance.

  • Calculate Annualized Return: Finally, the Razorpay ROI Calculator will also showcase the annualized return on your investment, helping you understand the yearly growth rate of your investment.

The Razorpay ROI Calculator allows you to determine the return on your investments with ease. To utilize the Razorpay ROI Calculator effectively, follow these simple step

  • Input the Investment Amount: Begin by entering the total amount you have invested.

  • Enter the Returned Amount: Next, input the amount that you have received as a return on your investment.

  • Set the Duration of Investment: Specify the holding period of your investment, indicating the duration for which you held the investment.

  • Select your business Type: Choose the appropriate business type or category that best describes the nature of the investment.


Absolute ROI Formula with Example

The formula for calculating absolute ROI is:

Calculate Absolute ROI:

  • Absolute ROI is a way to see how well your investments performed in a short period, like less than a year.

  • To find the absolute return, you can use a specific formula: ROI = (Net Profit / Initial Investment )* 100

  • Here, Net Profit refers to the final value of your investment minus the initial value of your investment.

  • Let’s say that you invested Rs.30,000 and earned Rs.60,000. Then, ROI = ((60,000-30,000)/30,000)*100

  • ROI = 100%


Annualized ROI Formula with Example

The formula for calculating annualized ROI is:

  • The annualized return is figured out by looking at how well the investment did over different time periods, using a specific formula to find the result.

  • Here's the formula for calculating the annualized return on investment (ROI). It takes into account the compounding effect of interest.

  • Annualized ROI = [(Total return/Initial Investment) ^ (1/Holding Period)] - 1

  • Let's say that you invested Rs.30,000 and earned Rs.60,000 back at the end of five years. In this case, Annualized ROI = [(60,000/30,000)^(⅕)] - 1

  • Annualized ROI = 0.1486 = 14.86%

How Does ROI Calculation Help you?

  • Embrace Diversification: Evaluating investments based on ROI and risk tolerance supports the implementation of a diversified investment strategy. Diversification spreads investments across various asset classes, industries, or regions, reducing risk while aiming for satisfactory returns.

  • Monitor Performance: Regularly calculating ROI and tracking investment performance enables investors to make necessary adjustments to their portfolio as market conditions or personal circumstances change. It helps them stay on track or make timely adjustments if required.

  • Understand Opportunity Cost: ROI assessment allows investors to grasp the opportunity cost of investment decisions. With multiple investment options but limited resources, ROI aids in prioritizing the most promising opportunities based on financial goals and risk tolerance.

ROI calculation is useful for evaluating the profitability and suitability of an investment. Considering ROI as per an individual’s financial goals and risk tolerance can enable investors to make the right decisions. ROI Evaluation of an investment helps investors to:

  • Determine Profitability: ROI enables investors to gauge potential profitability and ascertain whether an investment aligns with their financial goals, such as generating profit or meeting income targets.

  • Quantify Returns: Using ROI as a standardized metric, investors can compare the returns of different investments, facilitating the prioritization of opportunities with the best potential returns.

  • Account for Risk: While ROI is essential for assessing returns, it does not consider associated risks. Considering risk tolerance alongside ROI helps investors evaluate the level of risk they are comfortable taking on to achieve their financial objectives.

  • Address Long-Term Goals: ROI calculation is particularly valuable for long-term financial planning, helping investors identify investments with compounding potential to support their future financial goals.

Use Cases for ROI Calculation

Real Estate

Real-estate investments are another area where ROI is popularly used as a metric. Say you are comparing two properties and wondering which one to purchase. Property A costs Rs.1 crore but has the potential to appreciate to Rs.2 crore in a year’s time. The property is in a commercial district that is in high demand.

Property B costs Rs.50 lakh but has the potential to appreciate to Rs.1.2 crore in a year’s time. However, this property is in a new, growing neighborhood, with a promising if unknown future.

A would give you a higher absolute profit in rupee terms (Rs.1 crore), but the ROI would be 100%. B would give you a lower absolute profit (Rs.70 lakh), but the ROI would be higher at 140%.

The risk is different in both cases and it is up to each individual to decide how much risk they are willing to take.

Mutual Funds

We can look at a few different situations here. Let’s take the example of a mutual fund. Mutual funds are popular investment vehicles. Let's say there is an equity fund that offers a 1-year return of 12.6% but is classified as high-risk. On the other hand, there is a debt fund with an 8.3% 1-year return but is classified as low-risk. Now, every investor has their own risk appetite. So an investor can compare the two funds based on their ROI while assessing how much risk they are prepared to take.


What is a Good ROI?

For an investor, what qualifies as a good ROI depends on a number of factors such as the risk appetite, the end goal, and the investment horizon. If you are an investor, you need to ask yourself a few questions:

  • How much risk can I afford to take?

  • How much profit do I want to make from this investment?

  • Do I want long-term returns or am I only invested for the next one year?

  • Is there an opportunity cost? That is, what are you missing out on - What returns would you get if you invested your money elsewhere?

In the stock market, most investors will view an average annual rate of return of 10% as a good investment. In the US, the S&P 500 (an index of the 500 leading publicly traded companies) has historically generated an average return of 10%. In India, the Nifty 50 has delivered an annual return of 10.65% over the last 15 years and around 13% over the last 10 years.


Benefits of using ROI Calculator

  • Efficiency: ROI calculators save time and effort by quickly evaluating investments.

  • Objectivity: Data-driven calculations reduce emotional biases for objective decisions.

  • Comparison: Easily prioritize investments based on potential returns.

  • Risk Assessment: Evaluate investment risk with cost and return analysis.

  • Resource Allocation: Efficiently allocate resources to high-return projects.

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