What Is the Formula for Average ROI?

The formula for calculating average Return on Investment (ROI) is essential for investors looking to evaluate the overall performance of their investments over a specific period. The average ROI provides a simple way to assess how well a portfolio is performing by averaging the returns from multiple investments. The formula is as follows:

ROI = net income ÷ cost of investment × 100

Example: Consider an investor in India who has three investments:

• Investment A: ROI of 10%
• Investment B: ROI of 15%
• Investment C: ROI of 20%

To calculate the average ROI:

1. Total ROI = 10% + 15% + 20% = 45%
2. Number of Investments = 3

Now, applying the formula:

Average ROI=45% ÷ 3 =15%

This means the average ROI for the investor’s portfolio is 15%.

Using average ROI helps investors gain a clearer picture of their financial health and long-term growth potential. You may use the ROI Calculator to plan your long-term financial investments and returns.