Return of and on Investment Formula

We often here the term ROI or return on investment in mutual funds, hedge funds and real estate investing. The ROI formula is very simple yet it conveys a vital information for investors.

What is my ROI?

In the world of investing, the most often question is: what is the ROI? Most people knows what ROI is, but not often did they ask its application. ROI is a part of an investment strategy in which investor calculates how much money their money is making and for the rate in which an investment money will return. In other words an ROI does not just answer how much, an ROI also answers how long an investment money returns to your pocket.

The key is HOW LONG

If you are an investor and you will put off your money, you will want to know how long does it take to get that money back so that I can invest it on another investment vehicle. The usual answer is in months and in years. When the ROI is high, the probability that that money will get back within months is high. When the ROI is low, your money may return after a year.

ROI Calculator

The formula for return on investment is as follows.

ROI = (earnings)
            Capital

Rate of return =   Capital   
                           earnings

With regards to the topic of the discussion, I have made a calculator to as a preference for investors in calculating their ROI.

Monthly Profit:
Initial Investment:
ROI:
Rate of Return: