Return on investments is performance measure used to evaluate the efficiency of an
investment or compare the efficiency of a number of different investments. ROI helps to
directly measure the amount of return on an individual investment, relative to the investment’s
cost. The ROI Formula is:
ROI = (Net profit / Cost of Investment) x 100
There many types of investment an individual can invest. Let’s being with growth investments.
Growth investments is usually for long term investors that are willing and able to survive
market ups and downs. Shares are considered as a growth investment, as they can grow the
value of original investment over the medium and long term. The benefits of investing in shares
are potential capital gains, potential income from dividends and lower tax rates on long term
capital gains. Disadvantages of buying shares uncertainty, high risk, fluctuation in market price,
limited control and many more. Usually the good ROI on vigorous investor is 15% annually.
Investor can easily double the buying power every six years if they make an average ROI of 12%
after taxes and inflation every year. Property is also a growth investment. Prices of houses and
other properties can also rise significantly over a short (if in bay area), medium or a long period.
It is possible to invest directly and indirectly in property. Investor can buy property or invest in
property investment funds. Advantages of purchasing an investment property is property
market is more stable than the other markets. It also generates fixed returns to the investors.
the incomes are more certain because investor receives constant rental payment from the
tenants. Few disadvantages of investment properties are high entry and exist costs, cover the
entire cost if no rental for few months. I find property investments very safe. As we own
investment properties in Pennsylvania. I usually don’t have to worry about that investment and
thankfully my rentals are really good so far. Lastly is defensive investments. Defensive
investment includes Cash investments and fixed interest investments. Cash investments
includes bank accounts, saving accounts and deposits. Cash investments have lowest potential
returns on investments. Advantages of cash investments is that it is the safest investment, as
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