ROI stands for Return On Investment, it is a term used to clearly outline the performance of an investment. It will be a percentage that signifies either the gain or loss in the value of said investment.
ROI is calculated with just two variables, initial investment value and ending investment value. The formula for ROI is:
ROI = (Total Value Change / Initial Invested Amount) * 100
With this formula you will find the ROI percent that can dictate how well a business or investment has played out for you.
Let's say you invested $500 into a stock and you just sold the position for a total of $1,265. To find the ROI of this investment the equation would look like this:
ROI = ((1,265 - 500) / 500) * 100
After doing the math we find the ROI on the investment was 153%, meaning a total profit of $765.
Your ROI can also be negative if your investment lost money. Let's swap the values of the previous examples, you invested 1,265 initially and sold the same position later for a total of $500. Inputting those new values we would get an ROI of -60.47%, or a loss of $765.
Our ROI tool is very easy to use, follow these few steps:
With this tool you will get two different results back, your ROI percent and your total value change.
A ROI of 20% means an investment gained value by a total of 20%. For example, if you invested $1,000 into a stock it would have gained 20% to now be worth $1,200.
It is hard to say what a good ROI is since the number varies based on the investment type. A good ROI on a stock will not be the same as a good ROI from owning a business. If we had to speak generally, anything over 10% is considered good, especially in the realm of stocks.
A 30% ROI is possible but will likely require an extremely risky investment or venture.
Yes, if you have an ROI of 100% you have doubled your money, or value of the investment.
Create Date: September 16, 2024
Last Modified Date: September 19, 2024
