How the return on investment works
Formula. ROI = (value returned − amount invested) ÷ amount invested. Yearly return = (returned ÷ invested)1 ÷ years − 1.
Example. 5,000 that becomes 7,400 in 2 years is a 48% return, or about 21.7% a year.
Tip. Compare investments on the yearly figure. 48% over two years and 48% over five years are very different results.