Understanding Return on Investment (ROI)

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You should always evaluate your performance, whether you're a long-term investor, businessperson, swing trader, or day trader. Without this, how would you know if you were succeeding? One of the major advantages of investing or trading is that you can accurately assess your performance using objective criteria. By doing this, emotional and cognitive biases can be significantly reduced.

How then can this be useful? The human mind, in trying to make sense of the universe, has a tendency to create stories around everything. You cannot, however, "hide" from numbers. Your strategy needs to be altered if you're generating negative returns. Similar to this, if you believe that you are doing well but the statistics don't support this, you are likely a victim of your biases.

However, as someone who has been trained in the area of finance, I have discussed and shared with you what ROI is and how you can be able to calculate ROI in whatever businesses or investments you're doing.

WHAT IS RETURN ON INVESTMENT (ROI)?

One thing that investors or business people usually look at first before they finally agree to business terms and conditions is the kind of ROI they can get from the business. The performance of an investment can be gauged using the return on investment (ROI). It can also be used to contrast various investment options.