how do you calculate the return on an investment 
knowing how to calculate the return on an investment roi is crucial for evaluating your investment s performance roi gives you a quantitative measure of how well an investment is doing taking into consideration either gains or losses the most straightforward way to calculate roi uses the following formula roi final investment value initial principal initial principal x 100the bottom linethe concept of principal serves as a key term for understanding financial products like loans bonds and investments knowing how principal interacts with interest inflation and returns can empower you to make more informed financial decisions a firm grasp of the idea of principal is vital for your financial well being whether you re borrowing money or looking to grow your nest egg through investments 