InvestorQ : Let me know the differences between ROTI (returns on time invested) and ROI(return on investment)?

# Let me know the differences between ROTI (returns on time invested) and ROI(return on investment)?

9 months ago
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Return on investment (ROI):

It is a performance measure that investors use to evaluate the returns of an investment. It can also be used to compare the efficiency of different investment options. We measure return on an investment relative to the cost of investment.

Here’s how you can calculate ROI:

((Gain on investment – Cost of investment)/ (Cost of investment)) x 100
In the formula, gain on investment refers to the profit that the investor generated from selling the investment or increase in the value of an investment over time. So, return on investment helps an investor to determine the most preferable investment opportunities.

Return on time invested:

The meaning I can draw here is, you want to know the return that you will get by investing your time in a particular project. Sometimes, people invest and the returns (monetary) they are getting are the best but, they may not be. That is mainly because sometimes we ignore the time value of money in our investment.

For example, if you are investing in a fund, you should see whether the time that you are investing in that is worth the returns you will get. Say, you invest in a certain fund, and after 15 years, you get 6% returns overall. Is it worth it? Not. The same % age of return you might have gotten in a very short period.
Secondly, you also invest your time in certain projects which might not worth the time. Suppose you do a job and save Rs 5000 on it by giving it more time. However, how much time? Value the time. How much salary you paid/got for the same time given on the job? Say you spent 15 hours on that job to save those 5000, and the total cost of your time for that job would have been Rs 15000. So, the job isn’t worth it, right?

There’s no specific formula to calculate return on time invested. You can only calculate it against some pre-specified standards.

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