What's a Good Return on Investment (ROI)? (2024)

FAQs

What's a Good Return on Investment (ROI)? ›

What is a good ROI? While the term good is subjective, many professionals consider a good ROI to be 10.5% or greater for investments in stocks. This number is the standard because it's the average return of the S&P 500 , an index that serves as a benchmark of the overall performance of the U.S. stock market.

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%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.

A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.

In some industries, a positive ROI can be as high as 10 to 15%. For others, a 1 to 2% return is sufficient.

An ROI of 30% can be good, but it can depend on how long your ROI has been at 30% in previous years.

What is a good ROI? While the term good is subjective, many professionals consider a good ROI to be 10.5% or greater for investments in stocks. This number is the standard because it's the average return of the S&P 500 , an index that serves as a benchmark of the overall performance of the U.S. stock market.

Historically, the average ROI for the S&P 500 has been about 10% per year.3 Within that, though, there can be considerable variation depending on the industry.

This will vary based on your specific costs and margins, and the goals your business wants to achieve. For the marketing industry in general, 500% (also expressed as 5:1) is considered to be a good ROI. In this scenario, you'd gain $5 for every dollar you spend on a particular campaign.

For lean projects, 30% ROI is usually the standard for a worthwhile project, while 50% ROI is considered a very successful endeavor.

The U.S. stock market is considered to offer the highest investment returns over time. Higher returns, however, come with higher risk. Stock prices typically are more volatile than bond prices.

What is a good return value? ›

Expectations for return from the stock market

Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average.

A lot of advisors would argue that for those starting out, the general guiding principle is that you should think about giving away somewhere between 10-20% of equity.

In general, a good ROI on rental properties is between 5-10% which compares to the average investment return from stocks. However, there are plenty of factors that affect ROI. A higher ROI often also comes with higher risks, so it's important to compare the reward with the risks.

The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation. Investors can expect to lose purchasing power of 2% to 3% every year due to inflation. » Learn about purchasing power with the inflation calculator.

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

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%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.

There is no set percentage. Some agencies might be satisfied with a 5-percent ROI, while others might be on the lookout for a higher number like 20 percent for it to be considered good ROI.

Overall, a 25% yearly return on investment is a strong performance, but it's important to evaluate the investment's risks and historical performance before making any investment decisions.

Usually the implication is that they can expect, over a long time, a 10% return. Fortunately some ask, with some doubt, "Is a 10% return really reasonable?" It is not. While the average growth or return in the market (e.g., the S&P 500) is about 10%*, investors over time do not see that.

Having a ROI of 50% on an investment can look good by itself, but there's the context you need to determine how well the investment has done. It's 50% now, but if it was 70% a year ago, this may not be the solid investment you think it has been.