Return on Investment (ROI) is a popular profitability metric used to evaluate the efficiency of an investment or compare the efficiencies of several different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. This formula helps investors make decisions between various investments and determine their financial returns.
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Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
Her insights simplify complex financial topics into actionable strategies for beginners and seasoned traders alike.