What is ROI? How to calculate ROI?

　　We have a lot of people who know investment,but we don't know what the return on investment is.If we don't know the return on investment,then our actual control is equivalent to 0.Therefore,it is also very important for us to understand the return on investment.Only by better understanding our return on investment can we better grasp our investment situation.

　　Any natural investment needs to be rewarded.If our investment is not rewarded,I believe that no one is willing to invest.So at this time,we need to use the return on investment to better restore the value of our investment at that time,that is,when we make a certain investment,how much economic return do we get?

　　In simple terms,return on investment is simply called ROI.The return on investment can well reflect how much money we make in the process of investment and what proportion of the overall investment we occupy.Using the formula to calculate,the total return is equal to profit/input cost*100%.This is a very important indicator,which can well reflect our overall profitability in the investment process.At the same time,it allows us to better grasp whether our investment is a correct investment.Let's take an easy-to-understand history to explain to you.For example,we invested 1 million yuan today,but we have to find out how much money we have earned this year,and what is our investment and return ratio?In such a situation,we will be able to better grasp our return on investment this year.We can also compare the return on investment in previous years to see if our investment has grown significantly this year.

　　The return on investment has both advantages and disadvantages.His advantage is that he can better allow us to judge the comprehensive profitability of our investment.We will have diversified investments in the investment process.When we invest in multiple quantitative investments,we will conduct comprehensive considerations and eliminate those factors that differentiate us in the investment process.Then,focus on rectification and make a horizontal comparison.Then we can better grasp in which direction our investment should be tilted in the coming year,and how should we optimize our asset allocation?

　　He also has shortcomings.The main reason for his shortcomings is that his overall situation is not particularly strong.Then when we go too far to see the rate of return of a certain investment,we may ignore the problem of a certain central point.Let's look at it from another angle.For example,this year we are investing in the coal industry,which may be a slower growth cycle.During this year's investment process,there may be substantial losses.But by next year's peak season,his entire rise will be particularly large.At that time,our profit margins will be greatly increased,and there will be a process of accumulation.However,we only evaluate the return on investment this year and next year through the return on investment,so we cannot fully reflect the fluctuation cycle of an investment.

　　There is a formula here.When most of us calculate the rate of return on investment,we use the annual rate of return.The annual rate of return is the annual rate or average rate of interest divided by the total investment,and then multiplied by 100%.The result calculated in this way is our average annual investment rate of return.Through this rate of return,we can better see the results of our actual investment and expenditure this year,and can truly let us grasp our investment this year.The situation is to make money or lose money.Has there been a better growth compared to previous years?

　　Therefore,from the perspective of this company,we can know that we want to make more money,and we should appropriately reduce our investment costs.Then let's expand our profit margins as much as possible.It is the efficiency of high-asset utilization investment to obtain a huge profit return with a very small amount of investment.

　　Let us give you another example,such as when we go to buy a batch of computer equipment.We spent a total of 100,000 yuan,and after our careful business operations,we sold this batch of computers for 200,000 yuan,and our annual return on investment reached 100%.

　　But if I also buy a batch of computer equipment,I have already bought this piece of equipment with 80,000 yuan at this time,and then I still have a price of 200,000 yuan to sell it.In the end,my annual rate of return was 120%,I reduced my costs,my income was increased,and my annual rate of return was greatly increased.

　　Therefore,in the process of investment,we should not only pay attention to our cost investment,but also pay attention to how much our rate of return is.

　　The vast majority of our investments require costs,so when we make investments,we should carefully consider whether the costs we put out are affordable to us.At the same time,we should think about how we should reduce our costs.If our costs can be reduced enough,even if we don’t need to spend any costs,the more favorable our investment will be.

　　The role of ROI is very large.When we know how much profit margin we have on our investment,we know how we should plan our investment.To put it another way,when we find that our investment can be very profitable,I believe that the vast majority of us will also put a lot of money on this one project.For example,when you invest in a certain project,you find that the return on investment of this project can reach 80%.Are you particularly excited?Naturally,a lot of money will be put into this project.

　　If you find that one of your investment projects can only bring you a profit of 5%or even 3%,you will naturally reduce the ratio of your investment.Because you think this investment ratio is not very impressive,and it is not even very attractive to you.

　　So the return on investment allows us to better grasp,when we invest in this product,how much profit margin we can get,we can understand at a glance what we can get in the process of investment?For every investment,we must first understand how much profit margin we have,and then think about whether we should invest or not.

　　Therefore,when we can make good use of the return on investment,we can also better embrace our future.