What Is a Good ROI? Benchmarks and Expectations
One of the most common questions people ask after calculating their return is: "Is this a good ROI?" The honest answer is that it depends. What counts as a good return varies significantly based on the type of investment, the level of risk, the time horizon, and industry norms.
That said, there are well-established benchmarks that can help you set realistic expectations and evaluate your results in context.
General Rule of Thumb
As a baseline, an annual ROI of 7% to 10% is generally considered good for long-term, moderate-risk investments. This range reflects the historical average annual return of the U.S. stock market (S&P 500) after adjusting for inflation, which has been roughly 7% over the past century.
If your investment consistently returns more than 10% annually, it is performing above average. Returns significantly higher than that often come with proportionally higher risk — which brings us to the relationship between risk and reward.
ROI Benchmarks by Investment Type
| Investment Type | Typical Annual ROI | Risk Level |
|---|---|---|
| Savings account / CDs | 3–5% | Very low |
| Bond funds | 4–6% | Low |
| S&P 500 index fund | 7–10% | Moderate |
| Real estate (rental) | 8–12% | Moderate |
| Small business | 15–30% | High |
| Digital marketing | 200–500% (ROAS) | Variable |
| Venture capital / startups | 25%+ target | Very high |
Why Context Matters More Than a Number
A 15% ROI from a rental property is excellent when you consider the relative stability of real estate. That same 15% from a cryptocurrency investment might not be worth the volatility and risk of losing your principal. Context always matters.
When evaluating your ROI, consider these factors:
- Time horizon: A 50% return over 10 years averages about 4.1% per year — modest by most standards. Always compare annualized returns.
- Risk: Higher returns usually require accepting higher risk. If you cannot afford to lose the money, a lower-ROI, safer investment may be more appropriate.
- Opportunity cost: Compare your ROI against what you could have earned putting the same money elsewhere. If an index fund would have returned 9% and your investment returned 6%, your relative performance was below market.
- Liquidity: Money locked in real estate or a private business cannot be easily accessed. Consider whether the higher ROI justifies the reduced flexibility.
- Inflation: A 5% nominal return in a year with 3% inflation means your real purchasing power only increased by about 2%.
Industry-Specific Expectations
Stock market investors generally consider 7–10% annual returns (including dividends) to be good. Beating the S&P 500 consistently is considered excellent and is something most professional fund managers fail to do.
Real estate investors typically look for a cash-on-cash return of 8–12% for rental properties. House flippers often target 15–20% per flip, though this involves more active work and higher risk.
Marketers often use ROAS rather than ROI. A ROAS of 3:1 to 5:1 is generally considered healthy for e-commerce, but this varies widely by industry and profit margins.
Small business owners frequently see ROIs of 15–30% on operational investments like equipment, hiring, and process improvements. The higher returns reflect the effort and risk of running a business.
Check Your Own ROI
Wondering how your investment stacks up? Use our free ROI Calculator to see your exact return percentage. For a deeper understanding of the formula, visit our guide on how to calculate ROI. If you are comparing advertising metrics, our ROI vs ROAS comparison explains when each metric applies.