ROI Formula
ROI (%) = (Final Value − Initial Investment) ÷ Initial Investment × 100
Annualised ROI = ((1 + ROI/100)^(1/Years) − 1) × 100
Benchmark Comparison:
Benchmark Final Value = Initial × (1 + bench%)^years
Alpha = Your annualised ROI − Benchmark ROI
ROI Benchmarks in India
Sensex 20-yr CAGR: ~12%
PPF: 7.1%
FD: 6.5–7.5%
Real estate (metro): 8–12%
Gold: ~10% (10-yr CAGR)
Nifty 50: ~13% (15-yr CAGR)
FAQs
What is a good ROI for a business investment?
For business investments, ROI above 20% annually is considered strong. Early-stage businesses may target 30–50%+ but carry higher risk. For mature businesses, 15–25% is healthy. Always compare against the opportunity cost (what you'd earn in a safe investment like FD or index fund).
How is ROI calculated?
ROI = (Net Profit / Cost of Investment) × 100 = ((Final Value - Initial Investment) / Initial Investment) × 100. For a time-adjusted figure, annualised ROI = ((1 + ROI/100)^(1/n) - 1) × 100 where n is the number of years.
