What is Return on Investment | ROI

Return on Investment (ROI) means how much money you made (or lost) compared to how much you originally invested.

It shows you if an investment was worth it, but ROI doesn't tell you everything — like how long it took to make that money — but it’s a quick and simple starting point.​

How to calculate return on investment with examples 🔢:

1. Buying Stocks: buy $1000 worth of Apple stock. A year later it’s worth $1200.

   • You made $200 profit.

   • ROI = (200 ÷ 1000) × 100 = 20%.

2. Flipping a House: buy a house for $200,000, fix it up, and sell it for $250,000.

   • Profit = $50,000.

   • ROI = (50,000 ÷ 200,000) × 100 = 25%.​

​Why does ROI matter?​

• It measures success: Was this a good investment or not?

• It helps compare different investments easily.

• Higher ROI = better return (but often higher risk too!).