Return on Investment (ROI) Definition - Glossary

Return on Investment (ROI) is a metric measuring the profitability of an investment relative to its cost.

Return on Investment (ROI) is a financial metric used to evaluate the efficiency or profitability of an investment. It is calculated by dividing the net profit from the investment by the initial cost, then multiplying by 100 to express it as a percentage. A higher ROI indicates a more profitable investment. ROI helps investors compare the profitability of different investments. For example, if you invest $1,000 and earn $1,200, your ROI is 20%. This means you earned 20% more than your initial investment. ROI is crucial for decision-making in both crypto and traditional financial markets.