Measure the profitability of your investments
The fundamental metric of investment success
Clearly indicates how well an investment has performed relative to its cost.
Helps in comparing the efficiency of several different investment opportunities.
A universally understood percentage that makes financial communication easy.
By looking at annualized ROI, you can judge performance normalized over time.
Essential for reviewing the historical performance of your portfolio assets.
Used by businesses to evaluate the return on marketing spend, new equipment, or projects.
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI directly measures what you get back compared to what you put in.
Measured in %
For any asset class
Positive is good
((Current Value - Cost) / Cost) × 100
Best for periods less than 1 year or simple comparisons.
((1 + Total ROI)1/n - 1) × 100
Best for multi-year investments to see yearly efficiency.
Common queries about ROI
A 'good' ROI depends on factors like risk tolerance and time period. For stocks, 10-12% annually is historically considered good. For safer investments like bonds, 4-6% might be considered good.