In South Africa, Rateweb’s Return on Investment calculator is frequently used to assess an investment’s profitability. The ROI Calculator figures out how much money you made or lost on an investment as a percentage of what you put in at first. This tool could help you figure out your return on investment, whether you’re keeping an eye on how your Johannesburg Stock Exchange portfolio is doing, thinking about making a financial commitment for your business, or weighing the pros and cons of starting a new project.
What is Return on Investment (ROI)
Simply put, the return on investment (ROI) is the amount by which the total value of an investment exceeds its initial cost. Accumulated interest and dividends are included into the net final value, while investment costs like trading charges are subtracted. Return on investment is often expressed as a percentage.
How to Calculate Return on Investment ROI
The formula for Return on Investment is :
- ROI Cash= (FV-IV)/IV
- ROI % = (FV-IV)/IV * 100
Where:
- ROI Cash = The Cash you get as a return to your investment
- ROI % = The percentage return on investment
- fv = net final value: the final value of the investment including investment income and deducting investment costs
- iv = initial investment
The return on investment (ROI) is a fundamental efficiency statistic. You may use it to figure out if an investment is worth making, and you can also use it to compare investments with different ROIs. If the return on an investment is positive, then the investment was profitable; if it is negative, then the investment lost value.
Amount of time an investment was kept has no bearing on ROI. Earnings, interest, and dividends may all accumulate over time, making time a crucial aspect in determining an investment’s effectiveness. A good annualised return on investment indicates that your original investment has been profitable.
Let’s pretend you had to decide between putting R1000 into a fund that would grow to R1150 in a year and putting R600 into a fund that would grow to R800 in three years. Which one would be the best bet, financially speaking?