How reasonable is the return on investment?

How reasonable is the return on investment? Return on investment (ROI) refers to the return value that an enterprise should get through investment. That is, the economic return obtained by an enterprise from an investment activity covers the profit target of the enterprise. Because managers must obtain profits through investment and existing property, profits are related to the property necessary for operation. Investment can be divided into two categories: industrial investment and financial investment. What people usually say about financial investment mainly refers to securities investment. When investors choose investment projects, they are most concerned about risks and expected returns. Obtaining reasonable profits and expected returns is the value of investment activities. Investment income is one of the indicators to measure the economic benefits of investment products.

Investors often use the rate of return on investment to judge and examine the operating ability of an enterprise. The calculation formula is: return on investment = (annual profit or average annual profit/total investment) 100%. Suppose you bought a house with100000 square meters for100000. Then rent it out at the price of 4,000 yuan per month, and the property management company charges 160 yuan every month. Then the return rate of this property investment is: [(4000-160) *12/65438+million] 100%=4.6%.

It can be seen from the formula that the return on investment is directly proportional to the profit of the enterprise under the condition of constant total investment. Therefore, it can be simply understood that the higher the return on investment, the stronger the profitability of enterprises. If the return on investment is 0, it means that the enterprise has no profit.

How reasonable is the return on investment? Different industries have different investment returns. Most of them are between 5% and 20%. Generally speaking, the higher the return on investment, the better. But in fact, the return on investment has a certain relationship with the investment time. With the same amount of funds, the longer the investment time, the higher the return on investment. The return on investment is usually time-sensitive, and paying too much attention to the return on investment may ignore the long-term value of the enterprise.

In addition, faced with different risk preferences and investment periods, the reasonable rate of return is different. For example, the current rate of return is 4%-5%, and the probability of not losing money exceeds 99%. But how high can the allowable loss rate of return be, but it is extremely difficult to achieve a long-term stable 20% return. And even if it is true, the fluctuation of income is very large.

At the same time, if losses are allowed, the reasonable rate of return will often be higher. For example, the expected rate of return of an investment with a loss of 20% should be above 65,438+00%. This 10% does not mean that 10% is guaranteed, but 1 0,000 times the investment, and finally 10% on average. Otherwise, most people must think that it is best to stabilize at 4-5%. Another problem that needs special attention is that the essential difference between investment and gambling is that the final rate of return on investment may be positive or negative, but the expected rate of return must be positive. The expected rate of return on gambling is negative.