Return on Investment (ROI) measures the profitability of an investment as a percentage of the original cost. A higher ROI means better performance.
ROI Formula
ROI = (Final Value - Initial Investment) / Initial Investment ร 100
CAGR = (Final/Initial)^(1/years) - 1
What is a good ROI?
A good ROI depends on the investment type. Stock market averages 10-12% annually. Real estate gives 8-10%. FDs give 6-7%. Any ROI above inflation (6%) is considered positive.