⚠️ Important: Financial figures generated here are for planning purposes. Actual results may vary based on market conditions and individual circumstances.
What is Return on Investment (ROI)?
Measures the gain or loss generated on an investment relative to the amount of money invested.
How it Works
1. Define 'Amount Invested'.
2. Specify 'Amount Returned'.
3. Calculate percentage gain.
Step-by-Step Guide
1. Invested
Cost basis.
2. Returned
Final value.
3. Result
Percentage.
Example
Input: $1,000 In, $1,500 Out
Result: 50%
FAQ
What is a good ROI?
Depends on risk. Stocks average 7-10%; high risk should yield higher.
Can ROI be negative?
Yes, if you lose money, ROI is negative.
Is time a factor?
Simple ROI doesn't account for time. Use Annualized ROI for that.
Does this include taxes?
Usually calculated pre-tax unless specified.
Why use ROI?
To compare efficiency across different investments.
Conclusion
ROI is the universal language of profitability. Whether comparing stocks, real estate, or business ventures, normalizing returns to a percentage allows for apples-to-apples comparison.