Playbook: How To Calculate Your ROI
Many times when you are dealing with business or even in sports you will hear the term ROI. For example, what’s the ROI for Player A if we trade him for Player B or C. Or what’s the ROI for this business venture you want me to jump in?
ROI is your return on investment. Your return on investment is your gain from investment minus your cost of investment divided by cost of investment.
As an athlete or individual interested in different ventures it’s important to find what ROI is good for you. For some it may be smaller than others, what is most important is that you know what you are getting into and what you are comfortable with. My valued ROI is probably different than Kevin Durant’s because of our portfolios and risk assessments. That is not to say I’m in the right and he’s in the wrong of vice versa it’s to acknowledge that ROI isn’t an one shoe size fits all thing.
Will the money and time spent and the possible strain on a relationship be worth it in the end if I invest in my buddy’s clothing line? Is the ROI worth it, if I buy a house and end up getting traded? Is the ROI worth me buy a new luxury car or hiring a driver? THE ROI on spending money at the club vs opening up a new business or putting it into a blue chip stock portfolio. What’s the ROI on if I start my own investment fund vs just slowly building up my stock portfolio? ...These are all questions people have to answer when it comes to financial decisions.
What’s also important to understand is that you can’t get too obsessed with ROI when entering a business venture. Sometimes different ventures will have a high ROI but everything else within the company might not be up to par. As the saying goes, “not all money is good money”, it’s important to know what you are getting into.