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Profitable Investment
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 tries to directly measure the amount of return on a particular investment, relative to the investment's cost.
ROI = (Current Value of Investment - Cost of Investment) / Cost of Investment
The result is expressed as a percentage. A positive ROI means the investment gained value, while a negative ROI means it lost value.
A "good" ROI depends on risk and time. The stock market historically returns about 10% annually. High-risk ventures often target 20-30%+.
This is a simple ROI calculation. For time-weighted returns, you typically look at "Annualized ROI" or "CAGR".