[0:01]Hi, this is Mike from miketurco.com. I'm going to explain how to calculate ROI. This is a really easy presentation to follow, but it does move pretty quickly. So, be sure to pick up a copy of the ROI workbook at miketurco.com/roi.
[0:25]ROI or Return on Investment tells you how much money your money has earned. And here is the ROI formula. It's really easy to use. ROI equals net profit divided by your investment times 100, and it's expressed as a percentage. An ROI of 0% is your break even point. If you buy something for a dollar and sell it for a dollar, your ROI is 0%. An ROI of 100% means that you doubled your money. If you buy something for a dollar and sell it for two, your ROI is 100%. Here's a good example. Let's say that you bought a used car for $1,200 and sold that car for 1,800. Therefore, your net profit was 600 bucks. So, what was your return on investment? Well, your profit was $600 and your investment was $1,200. So, when you plug those numbers into the formula, you see that your ROI was 50%. That means you got all of your money back plus 50% more. Here's another example. Let's say you invested $2,000 on the stock market and then sold your stocks a year later for $1,200. That means your net profit was a minus $600. So, what is your return on investment? When you plug your numbers into the formula, you see that your return on investment was a negative 30%. In other words, you lost 30% of your investment.
[2:07]If you have any questions regarding ROI, feel free to call or email or visit my website at miketurco.com.
