Return on investment (ROI) is the ratio between the net income you get from an investment and the cost of the investment. A high ROI means the gains from the investment compare favourably to the cost. The ROI is a useful tool to evaluate the efficiency of an investment and to compare several different investments. The higher the ROI, the more efficient the investment is.
ROI is often expressed as a percentage. For example, if you invest $50,000 in a stock and earn $100,000, your ROI is 40%. If you invest another $50,000 in the same stock and receive a 30% return, you’ll earn a 20% ROI. This is also called a “net investment gain.”
The return on investment (ROI) metric is often used in business and investment decisions. It is an easy-to-calculate way to measure the effectiveness of a specific investment. It is popular in marketing because it can be applied to just about any type of investment. By calculating the ROI, you can make informed decisions about which investments to make.
The amount of return on investment an investment yields depends on a number of factors, including the type of asset, the level of risk involved, and the length of time it takes to generate a return. For example, if you’re a young family, a good return on investment would be 10%, while if you were an old retiree, the ROI would be lower.