Understanding ROI (or return on investment) is key for any business manager who needs to evaluate the value of an investment. This important calculation helps determine how an investor will proceed with any given investment, whether it’s a stock, bond, or property. While the basic calculation remains the same in every instance, there are variables from investment to investment, depending on what you’re working with. In Powell Butte, OR, Crestcom teaches businesses the importance of cost versus value when it comes to ROI, along with other important management courses and leadership training.
Here, these management course providers offer some important information on ROI.
ROI Is Historical
Investors should always keep in mind ROI is historical, meaning it takes into account all past returns. A particular investment that has done well in the past may flop in the future, so it’s a good idea to keep the value of an initial investment in mind. In fact, many stocks can yield ROIs between 200% and 500% in their growth phases but can dwindle down to single digits in the end, proving the importance of value versus cost recognition in the early stages.
Simply put, ROI gives you the bottom-line return of a given investment. What it doesn’t take into account, however, is time. Time is an important variable that must come into play for investors, as the duration of the investment will ultimately define its success. The CAGR, or the compound annual growth rate, defines the yearly growth on an investment and should be taken seriously by investors who are weighing value versus cost.
Understanding ROI can be a tricky concept for some, but luckily for those in Powell Butte, the team at Crestcom is available to answer any and all investment questions. Determining whether an investment is worth your time boils down to understanding the relationship between cost and value, so if you’re looking to invest wisely, Crestcom is for you. For more information about their management courses, visit their website or give them a call today at (541) 480-7783.