- ROI = net profit ÷ initial capital × 100%, counted after all fees.
- Illustration: Rp 1 billion capital, Rp 200 million profit, 20% service fee (Rp 40 million), ROI 16%.
- Also compare annualised ROI, because holding period changes the picture.
Return on investment, or ROI, is the most basic measure of whether an investment was worth the capital put in. For profit-sharing investments the calculation needs a little more care because profit depends on how a transaction turns out, not on fixed interest.
All numbers in this article are illustrations to clarify the method, not projections or promises of return.
The basic ROI formula
ROI = (net profit ÷ initial capital) × 100%. Net profit is the money you actually receive after all costs, not the gross profit of the transaction.
An illustrative example
Suppose an investor deploys Rp 1 billion into a transaction and, when the milestone is reached, the investor's share of profit is Rp 200 million. Melton Bridge's 20% service fee applies only to that profit, which is Rp 40 million. Then:
- Investor's net profit = Rp 200 million − Rp 40 million = Rp 160 million
- ROI = Rp 160 million ÷ Rp 1 billion = 16%
- Money returned = Rp 1 billion + Rp 160 million = Rp 1.16 billion
You can see the same scenario in the illustration section of the Fund Owners page. If a transaction produces no profit there is no service fee, but of course the investor receives no profit either, and in a bad outcome capital can be lost.
Why holding period changes the picture
An ROI of 16% sounds equally good whether achieved in three months or two years, yet the value is very different. So also compare annualised ROI: divide the ROI by the holding period in years. In the example above, if the money turned over in six months, annualised ROI is close to double the simple total; over two years, close to half. This simple calculation is enough to compare, though it is not a precise compounding formula.
Other things to factor in
- Tax: investment returns may be subject to income tax. The rules are covered generally in tax on profit-sharing investment income in Indonesia and should be confirmed with your tax adviser.
- Delays: if a milestone is delayed, the holding period lengthens and annualised ROI falls even though total ROI stays the same.
- Risk of not materialising: the ROI in the example is one scenario, not the only possibility.
Comparing with fixed interest
Because profit-sharing returns are not fixed, comparing them with deposit interest needs care. The difference in character is explained in profit-sharing vs fixed interest, and a real transaction flow from start to finish is in the bridge financing transaction case study.
This article is general education, not an investment recommendation.
Frequently asked questions
What is the simplest ROI formula?
ROI = (net profit ÷ initial capital) × 100%. Net profit is the money actually received after all costs.
Do service fees affect ROI?
Yes. At Melton Bridge the 20% service fee is charged on profit, so your net ROI is calculated after that fee is deducted.
Why calculate annualised ROI?
Because the same ROI looks very different when achieved in three months versus two years. Annualised ROI helps compare instruments with different holding periods.
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Educational content only, not financial advice. Returns are not guaranteed and capital may be lost.