Glossary
ROI (return on investment)
What you got back divided by what you put in, expressed as a percentage.
Put in $10,000, end up with $13,000, and your ROI is 30%. The number is only meaningful with a time period attached: 30% over one year is excellent, 30% over ten years is worse than leaving the money in an index fund.
ROI also quietly ignores the cost of your time. A side business returning 200% on $500 of capital sounds spectacular until you notice it consumed 400 hours, which values your time at under $3 an hour.
Where this matters
Index Fund Investing
Investing
Own the whole market at minimal cost and let decades do the work
- Capital
- Under $500
- First income
- Years
- Risk
- Ceiling
- Six figures
Rental Property
Real Estate
Buy property with borrowed money and let tenants repay the loan
- Capital
- $10k+
- First income
- Months
- Risk
- Ceiling
- Seven figures