ROI Made Simple: The Fitness Tracker for Your Wealth
The simplest way to measure how well your investments are performing, and what to do if they’re falling short
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India’s household financial savings have slipped to their lowest level in more than a decade.
Net financial savings fell to just 5.2% of GDP in FY24, down from around 8% a few years ago, while household liabilities have climbed to 6.2% of GDP.
For a salaried professional, this isn’t just another macro headline. It means your savings are thinner than ever, and every rupee you put away has to work harder. The simplest way to check whether it is? ROI - Return on Investment.
Think of ROI as the fitness tracker for your wealth, a single number that tells you if your money is growing at a healthy pace or falling behind.
Why ROI Matters
You wouldn’t skip a health check-up for years at a stretch. Your money deserves the same treatment. ROI shows how much your investment has grown compared to what you first put in helping you see if you’re building wealth or just standing still.
This is especially important when savings rates are falling and expenses are rising. ROI helps you decide whether to stay invested, add more to your portfolio, or switch to better-performing instruments - all crucial decisions if you want to stay on track for long-term goals like retirement or your child’s education.
The Simple ROI Formula
So how do you measure ROI? It’s simpler than it sounds:
ROI = [(Current Value – Initial Investment) ÷ Initial Investment] × 100
In plain words, take what your investment is worth today, subtract what you originally put in, divide by your original amount, and multiply by 100 to get a percentage.
A Real Example: How ROI Plays Out
Imagine you started investing ₹1,00,000 five years ago as part of your first financial plan. Today, your fund value is ₹1,55,000.
Here’s how the ROI looks:
ROI = [(1,55,000 – 1,00,000) ÷ 1,00,000] × 100 = 55%
That means your investment has grown by 55% over five years, a strong sign that compounding is working for you. Market-linked products, such as ULIPs, including HDFC Life Click 2 Invest, also allow you to switch between equity and debt funds, which helps you stay aligned with your changing goals, much like tweaking a fitness routine over time.
What a Good ROI Looks Like
This is where most investors get stuck - is 55% good? It depends on your goal and time horizon, but there are a few helpful benchmarks.
If your five-year ROI is higher than a fixed deposit’s 6-7% annual return, you’re already ahead. If it matches the historical long-term performance of the Nifty or Sensex (roughly 10-12% annualized), you’re right on track. And don’t forget inflation - if it’s 5%, then anything below that is barely helping you grow wealth.
The goal isn’t to chase the highest number every year, but to stay consistent and keep moving in the right direction.
Common ROI Mistakes to Avoid
Many investors calculate ROI but still fall into traps that distort the picture.
A big one is ignoring inflation - a 6% return might look fine until you realize it barely beats rising prices. Another is focusing on short-term ROI for long-term investments; market-linked products can look weak in a volatile year even if they deliver solid growth over a decade.
Costs and taxes also matter: fund management charges, exit loads, and capital gains tax can eat into returns if you don’t account for them. And finally, some investors simply stop checking - letting their portfolios drift for years. A quick annual review can prevent nasty surprises and keep your plan aligned with your goals.
Keeping Your ROI in Shape
Think of this as your money’s workout plan. Stay consistent with your contributions - skipping too many premiums or SIPs is like skipping gym sessions and expecting results. Revisit your portfolio when your life goals or market conditions change, the way you’d tweak your routine after hitting a plateau. And treat ROI like an annual health report - a once-a-year check is enough to make sure you’re still headed toward your target.
The Takeaway
With household savings at a decade-low, it’s not enough to just save - you have to make sure your savings are actually performing. ROI is the simplest check you can run to keep your wealth “fit.”
And if you’re looking for a long-term plan that offers market growth with flexibility, HDFC Life Click 2 Invest gives you the option to invest regularly, switch funds when needed, and stay aligned with your goals - helping you keep your finances in shape through every stage of life.