Professional User Guide
1. Total vs. Annualized Return
While "Total ROI" shows your absolute profit percentage, "Annualized ROI" is more useful for comparing investments of different lengths. A 50% return over 10 years is actually less efficient than a 20% return over 2 years when looked at annually.
2. Factoring in Costs
To get an accurate ROI, the "Amount Invested" should include all purchase costs, fees, and commissions. Similarly, the "Amount Returned" should be the net value after any selling costs or taxes are deducted.
Frequently Asked Questions
How is ROI calculated?
ROI = [(Net Profit) / (Cost of Investment)] × 100. It measures the gain or loss generated on an investment relative to its cost.
What is Annualized ROI?
Annualized ROI calculates the geometric mean return per year, allowing you to compare the performance of investments held for different lengths of time.