- Report this article
Find My Adviser
Find My Adviser
Connecting busy professionals, to expert financial advice.
Published Feb 19, 2024
+ Follow
When you invest your money, whether it's in stocks, bonds, real estate, or a business venture, your primary goal is to earn more money in return. The return on investment (ROI) is a measure that evaluates the efficiency or profitability of an investment, or compares the efficiency of several different investments. It is expressed as a percentage and is calculated by dividing the net profit of the investment by the initial capital cost.
Understanding ROI
ROI = (Net Profit / Cost of Investment) x 100
A "good" ROI is one that meets or exceeds the investor's threshold, which varies by investment type, risk tolerance, and market conditions. For example, a conservative investor might consider a 5% ROI per year good for a low-risk bond investment, while a venture capitalist might aim for a 30% annual ROI due to the higher risk associated with start-ups.
Benchmarks for Different Investment Types
Factors Influencing ROI
Conclusion
Determining what constitutes a good ROI is subjective and depends on individual investment goals, risk tolerance, and market context. A good starting point is to compare the potential ROI against historical averages for similar investments and adjust for current market conditions and your personal financial goals.
Investors should also consider diversifying their investments to spread risk and potentially increase overall returns. Consulting with a financial advisor can help in making informed decisions tailored to your specific financial situation.
Remember, investing always involves risks, and there's no guaranteed return. However, by making educated decisions and setting realistic expectations, you can work towards achieving a good ROI on your investments.
We are on a mission to make finance simple and accessible for all. For more content please follow and subscribe to our other channels here:
This blog post is for informational purposes and should not be considered financial advice. Always consult a financial adviser for personalised guidance.
Find My Adviser Insights
Find My Adviser Insights
557 followers
+ Subscribe
Like
Celebrate
Support
Love
Insightful
Funny
5
To view or add a comment, sign in
More articles by this author
No more previous content
- Is Cash in the Bank Really Safe? Feb 27, 2024
- Do I Have Enough to Retire? Feb 26, 2024
- Key factors to consider when looking at retirement planning Feb 23, 2024
- Stock markets are high, should I start investing? Feb 22, 2024
- How can Muslims Build a Shariah-Compliant Investment Portfolio? Feb 21, 2024
- What’s the Best Investment Portfolio for 2024 Feb 20, 2024
- How to Find a Trusted Financial Adviser Near You Feb 16, 2024
- Should I Have a Financial Plan? Feb 15, 2024
- If I have a lump sum, should I invest it all at once? Feb 14, 2024
- Achieving Your First Million Feb 13, 2024
No more next content
Sign in
Stay updated on your professional world
Sign in
By clicking Continue to join or sign in, you agree to LinkedIn’s User Agreement, Privacy Policy, and Cookie Policy.
New to LinkedIn? Join now
Explore topics
- Sales
- Marketing
- IT Services
- Business Administration
- HR Management
- Engineering
- Soft Skills
- See All