 # ROI – Return On Investment?

## What is ROI?

Return on investment (ROI) is a financial metric of profitability that is widely used to measure the return profit or gain from an investment. ROI is a simple ratio between net profit and cost of investment. A high ROI means the investment’s gains compare favourably to its cost.

## What is ROI and how is it calculated?

Return on investment, or ROI, is the ratio of a profit or loss made in a fiscal year expressed in terms of an investment and shown as a percentage of increase or decrease in the value of the investment during the year in question. The basic formula for ROI is: ROI = Net Profit / Total Investment * 100.

### What is a good ROI?

“A really good return on investment for an active investor is 15% annually. It’s aggressive, but it’s achievable if you put in time to look for bargains. ROI, or Return on Investment, measures the efficiency of an investment.

### ROI Best Example Formula?

ROI = (Net Profit / Cost of Investment) x 100
A company may use the calculation to compare the ROI on different potential investments, while an investor could use it to calculate a return on a stock. For example, an investor buys \$1,000 worth of stocks and sells the shares two years later for \$1,200.

### Most acceptable ROI percentage?

Most people would agree that, over time, an average annual return of 5 to 12 percent on your passive investment dollars is good, and anything higher than 12 percent is excellent.

### How do you calculate monthly ROI?

Take the ending balance, and either add back net withdrawals or subtract out net deposits during the period. Then divide the result by the starting balance at the beginning of the month. Subtract 1 and multiply by 100, and you’ll have the percentage gain or loss that corresponds to your monthly return.

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