We all part away from our savings to earn something out of it or in other words, we invest our money to earn out of it. The amount that we earn from an investment is termed as return on investment. Different investment products offer different terms of returns. While in some the return is predetermined at the time of investment, in others the returns are guided by various benchmark or market conditions and often people may earn a negative return on his investment or we may say that the maturity value of his investment is less that the principal amount of investment.
We may think then why do people invest in products which offer low or negative returns. It is worthwhile to note regarding this that the products which carry risk of generating negative returns, also has the potential to earn very high returns. So, people often go for such products to gain considerably from this products and they loss at times due to the timing of investment and redemption.
Schemes like Bank Deposits, Sovereign Bonds, PPF declare the returns beforehand while in products like mutual funds, shares, foreign currency, it is very difficult to predict the returns. And people opt for various products with different returns based on their individual risk appetite.
The best thing next to investment - the return on investment.After all the risks and pains, it’s finally time to rejoice. Everything that we invest on can get us positive and negative returns depending on the type of investment and market,which has been keenly observed and noted by the writer.
I’ve always heard this ROI term from salesmen, investors and on the news. I didn’t know it applied to me too! Great that I can use this term accurately in my personal and work life now that I understand it. It doesn’t just apply to money, it can apply to everything
The time I invested in my children had a great ROI because now I can see them happy and secure in life, with a great family relationship.