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About this tool
Calculating Return on Investment (ROI) and compounded asset growth is essential for planning long-term financial independence.
Compound Interest Growth Formulation
The future value of an investment portfolio combining an initial principal with recurring monthly contributions compounded monthly is governed by:
Where:
- A is the final future balance.
- P is the initial investment principal.
- PMT represents the recurring monthly contribution amount.
- r is the annual interest return rate.
- n is the compounding frequency per year (n = 12 for monthly compounding).
- t represents the timeline in years.
This local calculator provides blazingly fast compound interest simulations directly inside your browser container.
Frequently asked questions
Everything you need to know about ROI / Investment Calculator.
What is the formula for ROI?
Basic ROI = ((Final Value − Initial Investment) ÷ Initial Investment) × 100. For annualised ROI over multiple years, use: Annualised ROI = ((Final Value ÷ Initial Investment)^(1 ÷ years) − 1) × 100. The calculator computes both, along with total gain/loss in currency terms.
What is a good ROI percentage?
Context matters enormously. The S&P 500 has returned ~10% annually on average. Real estate in major cities has averaged 6–8%. A business investment should return at least your cost of capital (WACC), typically 8–15% for small businesses. Anything above 20% annually is considered strong.
Can I include regular monthly contributions in the calculation?
Yes. The calculator supports both lump-sum investments and periodic contributions (monthly or annual). When contributions are included, it uses the compound interest with payment formula to show how regular investing dramatically accelerates wealth accumulation.
What is the difference between ROI and IRR?
ROI is a simple ratio of gain to cost — it does not account for the timing of cash flows. IRR (Internal Rate of Return) is the annualised rate at which an investment's net present value equals zero — it correctly handles irregular cash flows over time. For multi-year investments with varying cash flows, IRR is the more precise metric.
How does compound interest differ from simple interest?
Simple interest is calculated only on the principal: Interest = P × r × t. Compound interest calculates interest on both the principal and previously accumulated interest: A = P × (1 + r)^t. At 8% over 30 years, a $10,000 investment grows to $100,627 with compound interest versus just $34,000 with simple interest.