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What is ROI?

A ROI example applied to an Equity crowdfunding investment

Wally avatar
Written by Wally
Updated over a week ago

ROI stands for Return on Investment. It indicates the profitability of a given Equity crowdfunding investment.

The ROI represents the relation between the net economic result and the invested net capital or, in simpler words, dividing the income generated through the real estate project by the capital invested by shareholders.

In the project pages, the ROI is always indicated pre-tax.

The total expected ROI represents the total return estimated to be obtained at the end of a given operation.

While the expected annualized ROI compares the overall expected return with the duration of the operation, expressing the ROI as if it was generated every year. Displaying the annualized ROI is useful for comparing the performance of different investments.

Practical example of ROI calculation

Suppose you have invested in a project that has an overall expected ROI of 24% over 2 years. The annualized expected ROI will then be 12% (calculated dividing 24% by 2 years).

According to estimates, by investing € 10,000 in the project, at the successful completion of the operation, you should receive a total gross return of € 2,400.

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