June 19, 2016

Return on Investment Calculator |ROI

Return on Investment Calculator | ROI


Formula Used:
ROI = ( (Earnings) – Initial Invested Amount) / Initial Invested Amount) ) × 100

How to Calculate Your Investment Returns?

 

Example 1:

If you haven’t deposited money into or taken any money out of your brokerage account, it’s relatively easy to measure your rate of return for the year. Just follow these steps:

  1. Get your account balance at the end of the year and write it down.

    You can get your year-end balance from your online broker’s Web site or from a printed statement.

  2. Get your account balance at the end of the previous year and write it down.

    Again, this information is available from your broker’s Web site or from a printed statement.

  3. Subtract the answer in Step 2 from the answer in Step 1. Divide that difference by the answer in Step 2 and then multiply by 100.

    Say your portfolio was worth $10,000 on December 31, 2014, and it was worth $12,000 on December 31, 2015. You would subtract $10,000 from $12,000 and get $2,000. Divide $2,000 by $10,000 and multiply by 100, and the answer is 20 percent. You earned a 20 percent rate of return in that year.

Example 2:   Now for a more complicated example. Again assume that your starting balance was $1000 and your ending balance was $1200, but that you made a $50 addition at some point during the year. This time, your investments only created $150 of new wealth. To turn that dollar figure into a percent, you have to decide “a percent of what?” – that is, how much money did the account have to work on during the year? Well, it had the initial $1000 for the whole year, and the $50 addition for some unknown portion of the year, so we’ll use the estimate that it had the equivalent of $1025 for the whole year (that is, the whole thousand, plus half of the fifty). Now the growth rate is

($150 growth) / ($1025 estimated average principal) = 0.1463
or 14.63 percent.


Analysis

Generally, any positive ROI is considered a good return. This means that the total cost of the investment was recouped in addition to some profits left over. A negative return on investment means that the revenues weren’t even enough to cover the total costs. That being said, higher return rates are always better than lower return rates.

Return on investment or ROI is a profitability ratio that calculates the profits of an investment as a percentage of the original cost. In other words, it measures how much money was made on the investment as a percentage of the purchase price. It shows investors how efficiently each dollar invested in a project is at producing a profit. Investors not only use this ratio to measure how well an investment performed, they also use it to compare the performance of different investments of all types and sizes.

For example, an investment in stock can be compared to one in equipment. It doesn’t matter what the type of investment because the return on investment calculation only looks that the profits and the costs associated with the investment.

That being said, the ROI calculation is one of the most common investment ratios because it’s simple and extremely versatile. Managers can use it to compare performance rates on capital equipment purchases while investors can calculate what stock purchases performed better.

Return on investment calculator

Online Investments can be Smart Investments, Smart Invest is with European Assets Investment Company

Here is example of our Thailand Property Investment calculation based on history:

calculation in USD  for studio in Pattaya, showing worst and best scenario:

Investment scenario for a studio apartment details
Total purchase cost in USD 33828
Equity in 100,00%
Investment period (years) 5
Time to completion (years) 2
RENTAL (from completion)
Conversative monthly rental income 511
Occupancy 80,00%
Commission Letting costs 10,00%
NET monthly rental income 368
NET Annual Income 4419
NET Yield 13,07%
Total NET Income over 3 years 13,259
Investors cost
Condo average Price 33828
Sinking Fund + Water + Electric meter 611
Setting up company+Lawyer fee+ 1989
Annual Balance Sheet (28.000 USD capital)
Cable Fee 102
White Goods + Furniture (some projects free) 5655
Transfer fee 3.3% 1116
Maintenance costs over 3 years 1211
Total Investor cost 44506
PROFIT
Purchase value 33828
Estimated Purchase Discount 25,00%
Estimated Market Value 45093
CAPITAL Growth Rate 10,00% 15,00% 20,00%
Potential value after 5 years 72624 90699 112212
Additional Income (Rental) 13260 13260 13260
Total Income 85884 103959 125472
ROI (profit) 41379 59455 80964
ROI (%) 92,97% 133,59% 181,91%
Estimated calculation. Actual calculation may vary, prices in USD, use 1 USD = 35,18 THB
13.06.2016

 

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