Question 1

How is ROI calculated?

Accepted Answer

ROI (Return on Investment) is calculated as: (Amount Returned - Amount Invested) / Amount Invested × 100. This gives you the percentage return on your investment. A positive ROI means profit, negative means loss.

Question 2

What is the difference between ROI and annualized ROI?

Accepted Answer

ROI shows the total return percentage for the investment period. Annualized ROI adjusts this percentage to an annual rate, making it easier to compare investments with different time periods. Annualized ROI is useful for comparing a 6-month investment with a 2-year investment.

Question 3

What is a good ROI percentage?

Accepted Answer

A good ROI depends on the investment type and risk level. Generally, 7-10% annual ROI is considered good for stocks, 3-5% for bonds, and 10-15%+ for higher-risk investments. Compare ROI to your investment goals and risk tolerance.

Question 4

How do I use ROI to compare investments?

Accepted Answer

Use annualized ROI to compare investments with different time periods. This standardizes returns to an annual rate, making it easy to see which investment performed better. Higher annualized ROI generally means better performance, but also consider risk.

Question 5

Can ROI be negative?

Accepted Answer

Yes, ROI can be negative if the amount returned is less than the amount invested. A negative ROI means you lost money on the investment. For example, if you invested $10,000 and got back $8,000, your ROI would be -20%.

ROI Calculator - Return on Investment Analysis

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