What's a Good Return on Investment (ROI)? (2024)

FAQs

What's a Good Return on Investment (ROI)? ›

General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.

Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average.

Is 30% Good ROI? An ROI of 30% can be good, but it can depend on how long your ROI has been at 30% in previous years. A 1-year ROI of 20% compared to 3-years of a 30% ROI can be considered a better investment.

Now, think about a real financial example: a 2 percent return. This may not sound impressive, but let's say you earned that 2 percent in a federally insured, high-yield savings account. In that case, it's a very good return since you didn't have to accept any risk whatsoever.

Return on Investment (ROI)

This calculation works for any period, but there is a risk in evaluating long-term investment returns with ROI. That's because an ROI of 80% sounds impressive for a five-year investment but less impressive for a 35-year investment.

What is a good ROI? While the term good is subjective, many professionals consider a good ROI to be 10.5% or greater for investments in stocks. This number is the standard because it's the average return of the S&P 500 , an index that serves as a benchmark of the overall performance of the U.S. stock market.

A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

A lot of advisors would argue that for those starting out, the general guiding principle is that you should think about giving away somewhere between 10-20% of equity.

Is 100% ROI doubling your money? ›

If your ROI is 100%, you've doubled your initial investment. Return on Investment can help you make decisions between competing alternatives. If you deposit money in a savings account, the return on your investment will be equal to the interest rate that the bank gives you to hold your money.

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

Regarding Amazon FBA, return on investment refers to the amount of money that sellers get in profits from their stock investment. So you can regard the ROI of your company as a whole, and you can check the ROI of each individual product you're selling. ROI is estimated as a percentage.

General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%.

Return on Investment (ROI) is a popular profitability metric used to evaluate how well an investment has performed. ROI is expressed as a percentage and is calculated by dividing an investment's net profit (or loss) by its initial cost or outlay.

Usually the implication is that they can expect, over a long time, a 10% return. Fortunately some ask, with some doubt, "Is a 10% return really reasonable?" It is not. While the average growth or return in the market (e.g., the S&P 500) is about 10%*, investors over time do not see that.

A 20% return is possible, but it's a pretty significant return, so you either need to take risks on volatile investments or spend more time invested in safer investments.

A thirty percent return is an achievable feat for one year if you're aggressive enough (and shall I say lucky enough), AND have the stomach to ride out the volatility, but consistently performing year after year becomes an incredible challenge that no one to my knowledge has done.

Overall, a 25% yearly return on investment is a strong performance, but it's important to evaluate the investment's risks and historical performance before making any investment decisions.