Plain-English definitions, reviewed by an independent investor
ROI (Return on Investment)
ROI is the basic percentage gain or loss on money you put to work, before fees and taxes.
ROI is the basic percentage gain or loss on money you put to work, before fees and taxes.
ROI = (Gain − Cost) ÷ Cost × 100%
Why it matters
It is the first number people quote to judge whether an investment was worth it.
Common confusion
ROI ignores time. A 20% gain in one month beats the same gain over five years.
Frequently Asked Questions
What is a good ROI?
It depends on risk and horizon. Compare it with a safe alternative like a savings rate or index return.
Does ROI include dividends?
Only if you add them to the gain; the raw formula uses price change alone.