When you invest your hard-earned money in any instrument, you would want to know about the expected annual returns. And one of the best ways to compute the same is to use the ROI calculator. Read on to know more about it.
Returns on investment are one of the critical factors that all consider while assessing the various investment options.
Calculating the returns manually can be overwhelming if your financial portfolio consists of multiple investments across different asset classes. Also, since different investments function differently, it can be challenging to compute the expected returns. This is where the returns on investment calculators play a critical role.
The ROI calculator is an online tool that allows you to calculate the annual and absolute returns on different investment instruments across different investment terms. It functions like any other online calculator, like a home loan EMI calculator, wherein you provide inputs in the calculator. It uses a specific formula to do the calculations and shows you the results.
Formula for calculating the returns on investment
ROI = Net Profit / Cost of the investment * 100
Benefits of using the returns on investment calculator
· As an investor, one of your primary objectives is to invest in instruments with excellent potential returns. With an ROI calculator, you can know the exact expected returns from different instruments and choose the right investment to suit your financial goals and risk-taking capacity.
· Another significant benefit of using this handy online tool is that it allows you to compute the absolute returns and annualised returns on the investments. This can help in making more informed investment decisions.
· Apart from showing the expected annual returns, you can use the tool to calculate the returns for different investment tenure. This way, you can have a clear vision of how you can accomplish your investment goals and take appropriate decisions.
· By knowing the returns on investment, you can know the exact worth of the investment against the benchmark index.
· Knowing the returns on investment at the start of the investment period helps in efficient planning; you can decide the holding period, the investment amount, etc.
How to use the returns on investment calculator?
Now that you know the benefits of using an ROI calculator, you must also understand how to use the tool.
Using the ROI calculator is simple; it requires you to follow a few simple steps as discussed below:
· Enter the investment amount
· Enter the amount returned
· Enter the investment term and press the submit or calculate button
The investment calculator does the calculations and shows the exact returns on the investment, i.e., the profits you have earned. The tool also shows you the total returns and the annual returns.
ROI calculator – A handy tool for efficient investment planning
The return on investment calculator is a handy tool for all investors. You can use it to know the returns you can get from your investment across different terms and plan your investments accordingly.