When you make an investment, you want to know that it is bringing you money back rather than costing you money. The percentage of how much you get back is called your return on investment (ROI). You can use the formula to calculate return on investment to calculate your ROI in the stock market or in your business. You simply need to know how much you got back from your investment and how much your investment was.
Subtract the cost of your investment from the amount that you received as profit. The cost of your investment might include fees that you pay to the investment company or the cost that it takes to make a product you're selling. Depending on what you're calculating the ROI for, you may also want to factor in the time you spent on it.
Divide the total from Step 1 by the total cost of the investment.
Multiply the number in Step 2 by 100. This gives your ROI as a percentage.
- Use return on investment to compare the different things that you invest your money into. You may find that the investment that seems to bringing you in the most money actually has a lower ROI than your other investments.
Maggie McCormick is a freelance writer. She lived in Japan for three years teaching preschool to young children and currently lives in Honolulu with her family. She received a B.A. in women's studies from Wellesley College.