What is Return on Investment?
Return on Investment
[(END VALUE/BASE VALUE) -1]*100
If we talk about the above Example -
160000/100000=1.6=1.60-1=.60*100=60%
Therefore, proper calculation of the return on your investment is very important.
Compound Annual Growth Rate
Return on investment is the second and most commonly used technique for calculating the rate of compound annual growth - CAGR
CAGR Extract Formula is -
[{(END VALUE/BASE VALUE) ^ (1/No. Of Years)}-1*100]
160000/100000=1.6^(1/5)=1.09856-1=.09856*100=9.856%
How to use Return on Investment Calculator?
You have seen that if we calculate the same investment differently, then we also get to see the return on investment differently,
Therefore, you will have to look carefully about the return on investment, which type of investment has been calculated, and then you can do comparative calculation to understand whether such investment is appropriate for you-
Also, keep in mind that whenever you calculate the return on investment for more than a year, you should use CAGR (Compound Annual Growth Rate).
And you should use CAGR (Compound Annual Growth Rate) to calculate the profit in the stock market.
Return on Investment – Summary
If we sum up our point, by return on investment, we mean knowing what exactly we are getting from any investment.
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