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Over 700 finance terms, Shmooped to perfection.
Return On Investment (ROI)
The money you gain or lose on your investments over a specific period of time. For example, if you own a stock, you look at your returns on investment over a period of two years, and you may find that you have gains of $1,000. Is that good? Bad? Depends on what you are expecting from your returns and what other investors have seen on their returns.
Put in a dollar. You expect to get more than a dollar back. If you invested a dollar and 3 years later you got back $3, your ROI was 300%. You made $2 in profits. But it's still written nomenclature as a return of 300%. If you invested $3 and 3 years later got back just $1, your return was negative 67%.