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What is the prime goal for putting money in an investment? Well, be it real estate or crypto, the fundamental thing that you would want to know is the ROI potential of that investment asset. ROI aka Return-on-Investment refers to performance of your investment, offering an idea whether the investment would be profitable and efficient. You must calculate the ROI of your preferred crypto investment asset before you proceed with crypto trade on the platform. Know more Bróker de trading Forex, metales, acciones e índices  | MultiBank Group

Why do You Need to Calculate ROI?

Ask any crypto expert about the most profitable cryptos to invest in today and BTC and ETH would top the list with élan. It’s primarily because both these coins have been offering high ROI over time. While BTC has brought over 29,000% ROI, ETH has helped to garner over 107,000% ROI.

When you are making an investment, you are putting your hard-earned money into an asset. You are putting your money in the hope that one day the same money will offer you magnified returns. But, the problem is, not every investment could be worth your money. Sometimes, you might end up with a short-lived asset or at times, the timing of investment might not be the right one. Thus, it’s extremely crucial to calculate probable ROI of your chosen investment crypto asset before or when you put money into it. The goal is to check whether you would be able to attain strong returns out of that crypto trade on the platform. And if so, what would be the percentage of return that you might be able to expect from that crypto investment.

The ROI calculation will enable you to gauge whether or not the investment would be or is worth your hard-earned money. Put simply, the ROI calculation will enable you to land up with more informed decisions regarding your investment. It’s self-explanatory why business magnets, bigwig investors, entrepreneurs, and industry leaders always stress on ROI calculation prior to investing their money into any asset. The same should be followed by any investor, regardless of level of experience and type of asset.

Negative and Positive ROI

When you measure ROI for your crypto investment (or any investment for that matter) you might get any of these two outcomes- negative ROI and positive ROI. Negative ROI refers to low net returns which happen when the return is lower than total cost of investment. Positive ROI refers to a higher percentage of net returns in comparison to the total cost of investment.

If your ROI calculation offers Positive ROI, you know you have made a smart investment. If you get negative ROI, you have to understand that it was not exactly a wise investment decision on your part.

Calculating ROI for Crypto Investment

Below is a brief on calculating ROI for crypto investment- however, the formula applies to gauging ROI for any kind of investment in any kind of investment asset out there.

The formula is simple and anybody with basic know-how of mathematics would be able to calculate ROI.

You will just need two types of figures here. One is the figure you have or might gain from your crypto investment. The other is your investment cost. You will need to subtract the first mentioned figure from the second. It will offer you the net income of the investment. Now, you will simply have to divide that figure by investment cost. It will offer your ROI figure of your crypto investment.

Let’s say, you have invested $5,000 in a crypto coin. You have sold it at $20,000. Based on that transaction, you are getting 3.0 ROI. Now, you would simply need to multiply 3.0 with 100 and you will get the ROI percentage- 300%. It means, with this investment, you will be getting 3x return of the investment amount.

ROI = (Investment Gain – Investment Cost) / Investment Cost

Good thing is, these days you will find ROI calculators online that will do the calculation legwork for you.

Should You Only Focus on ROI?

Now, the ROI metric undeniably offers you a quick and fair picture of the gain or gain potential of your investment. But the ROI metric alone is not enough to get the complete picture of your gain or loss percentage from a crypto investment or from any other investment vehicle.

It’s because when you calculate ROI of your crypto investment, you are only counting your investment cost or the capital you have invested in the asset. But, a crypto investment involves other costs as well- such as transaction fees, maintenance margin, trading fee, credit card charges, and so on. The ROI calculation doesn’t calculate these associated costs. But, your net or actual ROI is the one that you get after subtracting all these associated costs along with investment cost. Thus, the ROI metric alone cannot offer you the entire picture of ROI you receive at hand after the trade.

Bottom line is, you should definitely follow the ROI metric while calculating your loss or gain potential from your crypto investment. But, if you want the entire picture, make sure to count in the associated costs too with the investment capital while subtracting from investment return.

Final Words

Every smart investor aspires to attain maximum gain with minimal investment. The same goes for crypto investors and traders as well. Now, it doesn’t mean that you have to curtain down on your investment capital always. Rather, you should focus on ways to reduce the associated fees mentioned above. You certainly don’t want to waste 30% of the investment gain in transaction fees and trading fees of your crypto exchange. Visit Comercio de criptomonedas: Bitcoin, Ethereum, Ripple y Litecoin | Grupo Multibanco

Thus, be careful while choosing a reliable crypto exchange for trading and investing. Go for a one that charges reasonably affordable fees so that you can keep the larger part of the investment gain to yourself. Some of the leading exchanges offer discounts if you pay the exchange fees with that platform’s native coin. Finally, make sure to put your money in a crypto asset that holds the record of offering high ROI.