What Is a Good ROI?

A good ROI depends on the asset, the risk you take, and the time frame you hold it. A common yardstick is the broad US stock market: over the long run the S&P 500 has returned roughly 10 percent per year on average before inflation, or about 7 percent after inflation. Because of that, many investors treat beating a broad index as good, and they stay skeptical when an advertised return looks far higher, since higher returns usually come with higher risk.

What Is a Good ROI?

Return on investment, or ROI, measures how much you gained or lost on an investment relative to what you put in. A good ROI is simply a return that fairly compensates you for the risk you accepted and the time your money was tied up. That is why the honest answer to what is a good ROI is that it depends, and why the same percentage can be excellent in one context and disappointing in another.

To make the idea concrete, investors reach for a benchmark. The most common one is the broad US stock market, often represented by the S&P 500 index of large companies. According to the US Securities and Exchange Commission, stock markets let investors buy and sell shares of public companies. A frequently cited long-run figure is an average of roughly 10 percent per year before inflation, which works out to about 7 percent after inflation is subtracted. That gap matters, because inflation quietly reduces what your return can actually buy.

Because a broad index is easy to buy and reflects the whole market, many people treat matching or beating it as a good return on investment. If your investment earned less than a simple index fund while taking on more risk, it is hard to call that result good.

Why a Good ROI Depends on Risk

The single biggest reason there is no universal good ROI is risk. Higher expected returns come bundled with a wider range of possible outcomes, including losses. A modest-looking return can be very good if it came with almost no chance of loss, and a large-looking return can be poor once you account for how easily it could have gone the other way.

This is why an advertised return far above the broad market average should raise questions rather than excitement. If something offers double or triple the typical stock market return, it is almost certainly taking on far more risk. The SEC glossary defines return as the money made or lost on an investment over time, and it stresses that past performance does not guarantee future results.

A practical way to think about it: for every investment, ask what risk was taken to earn the return, then compare it with a fair benchmark for the same level of risk. A good rate of return is one that holds up in that comparison, not one that simply sounds impressive on its own.

Typical Long-Run Return Ranges by Asset Class

Different assets have historically delivered different average returns because they carry different levels of risk. The table below gives illustrative long-run ranges drawn from general market history, not a precise forecast. Actual results vary widely, and any single year can fall well outside these ranges. Use it to see the pattern: as the typical return rises, so does the risk.

Notice how the safest option sits at the bottom for return, while the broad stock index sits higher but with a bumpier ride. A good ROI for cash you might need next month is very different from a good ROI for money you will not touch for thirty years. The chart below shows the same ordering visually.

Good ROI vs Average ROI: Know the Difference

People often blur good ROI and average ROI, but they answer different questions. The average ROI is what a typical investment of a given type has delivered over time, such as the roughly 10 percent long-run average for the broad stock market. A good ROI is a judgment about whether a specific result was worth the risk and time involved.

In many cases, earning close to the market average is genuinely good, because matching a broad, low-cost index over decades is difficult for most active strategies. In other cases it is not enough, for example if you locked your money into something illiquid and risky and only earned what a simple index would have paid anyway. The comparison, not the raw number, tells you whether a return was good.

To turn your own numbers into a percentage you can compare, the ROI Calculator handles the arithmetic, and our guide on how to calculate ROI walks through the formula step by step.

Why Time Frame Changes the Answer

The same investment can offer a good ROI over one horizon and a poor one over another. Stocks are a clear example. Over a single year, a broad index can rise sharply or fall hard, so the short-term ROI is unpredictable. Over many years, the ups and downs have historically smoothed toward that long-run average, which is why long horizons and stocks are often paired.

Compounding is the reason time matters so much. When returns build on top of prior returns, small differences in rate grow into large differences in ending value over decades. The SEC provides a free compound interest calculator that shows how a steady return snowballs, and you can explore the same effect with our Compound Interest Calculator. The lesson is that a good ROI for a long-term goal like retirement is measured across many years, not judged by any single year in isolation.

Inflation is the other reason to watch the time frame. The chart below contrasts the roughly 10 percent long-run stock market average before inflation with the roughly 7 percent that has remained after inflation is subtracted. The after-inflation figure is the one that reflects real buying power.

How to Judge If Your ROI Is Good

Rather than chasing a magic number, run any return through a short checklist. This keeps you focused on whether the result was fair for what you risked.

Compare Against a Fair Benchmark

Match your investment to a benchmark of similar risk and time frame. For a diversified stock portfolio, a broad index is the natural comparison. Beating it consistently is genuinely good; trailing it while taking more risk is not.

Adjust for Inflation

A 6 percent return during high inflation can buy less than a 4 percent return during low inflation. The return that matters for your future spending is the real return, meaning after inflation. This is why the roughly 7 percent real figure for stocks is often quoted alongside the 10 percent nominal one.

Account for Fees and Taxes

Costs quietly shrink your ROI. A headline return of 8 percent can become far less after fund fees, trading costs, and taxes. A good rate of return is the one you actually keep, not the one advertised before those deductions.

Weigh the Risk You Took

Finally, ask how much risk produced the return. Two investments can show the same total ROI while one was far riskier or held far longer. Our sibling guide on ROI vs annualized return explains why annualizing makes returns over different periods comparable.

FAQs About a Good ROI

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Educational note: This article is general educational information, not investment advice, and not a recommendation to buy or sell any security. Returns are illustrative, based on general long-run market history, and past performance does not guarantee future results. All investing involves risk, including the possible loss of principal, and your own results will vary with the asset, the risk, the time frame, fees, taxes, and inflation. Speak with a licensed financial professional before making investment decisions. Reviewed for accuracy by Prof. Dr. Khalil Mudassar, PhD, as part of our editorial review process. Content last reviewed September 10, 2026.