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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.

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