ROI (Return on Investment)
Percentage of gain or loss relative to initial investment.
ROI (Return on Investment) is a basic metric measuring investment efficiency — how much you gained or lost relative to the initial investment.
Formula: ROI = ((Final Value − Initial Value) / Initial Value) × 100
Example:
•You bought BTC for $10,000, now worth $35,000
•ROI = (35,000 − 10,000) / 10,000 × 100 = 250%
ROI vs CAGR:
•ROI doesn't account for time — 250% in 2 months vs 250% in 10 years are drastically different
•CAGR (Compound Annual Growth Rate) standardizes return to annual level
Common mistake:
•Comparing ROI of investments with different durations
•Not including costs (exchange fees, taxes)
•Reporting ROI without time period