Return on Investment (ROI)

Return on investment (ROI) is a simple measure of how much an investment has gained or lost, expressed as a percentage of the amount originally put in.

How it works

ROI is calculated by taking the current value minus the original cost, divided by the original cost. A positive ROI means a profit and a negative one means a loss. It is straightforward but does not account for how long the investment was held or the risk taken, so two investments with the same ROI can be very different.

Why it matters

ROI is a quick, common way to compare outcomes across different assets or strategies. In volatile markets like crypto it should be read alongside the time period and risk involved, since a high ROI achieved with extreme risk is not the same as a steady one.

Example

Buying an asset for 100 and selling it for 150 is a 50% ROI.