ROI Calculator

Comparing returns fairly with ROI and CAGR

Return on investment answers a simple question: how much did you gain compared with what you put in? If ₹1 lakh becomes ₹2 lakh, the ROI is 100%. That figure is useful, but it hides one important detail, which is time. Doubling money in three years is far better than doubling it in twelve, yet both show the same ROI.

That is why this calculator also shows CAGR, the compound annual growth rate. It spreads the gain evenly across the holding period and gives you a yearly figure you can compare with a fixed deposit, a mutual fund or property. Using the example above, if ₹1 lakh doubled in six years, the CAGR is roughly 12.2% a year. Put two investments side by side on CAGR and it becomes clear which one actually performed better.

For property, gold or business investments, include all the costs you paid to get the full picture. Stamp duty, brokerage, maintenance, storage and taxes can reduce a headline gain considerably. Likewise, count any income you received along the way, such as rent or dividends, if you want the total return. CAGR assumes a single investment at the start and a single value at the end. If you invested in instalments, like a SIP, the right measure is XIRR, which accounts for the timing of each payment. Used carefully, ROI and CAGR help you judge past decisions honestly and set realistic expectations for new ones. It also stops a single good year from making an average investment look better than it really was.