What is a good return on investment (ROI)?

Financial advisors can help clarify this by considering individuals’ risk tolerance, age, income and other factors. However, here are some general guidelines: General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%.

Is a good return on investment worth the risk?

No investment is worth the risk unless you get a return. But what is a good return on investment? A "good" ROI varies depending on individual financial goals and the type of investment. Historically, small-cap stocks had a higher ROI (11.9% CAGR) than large-cap stocks (10.2% CAGR).

What are the limitations of a return on investment (ROI)?

ROI is not without limitations. First and foremost, ROI does not take time into account. If one investment had an ROI of 20% over five years and another had an ROI of 15% over two years, the basic ROI calculation cannot help you determine which investment was best. That’s because it doesn’t take into account compounding returns over time.