ROI is what the rich use to get rich and stay rich. It is what the rich used to become rich in the first place. ROI is your money working for you through investments instead of your money working against you though mortgages and loans. Now if you read my other articles you might that what I am saying is that everything that the rich do is the total opposite of what the rich do, and if you ever find yourself saying that while reading my articles then I want to say that you are completely right! Almost everything that everyone else does is exactly the opposite of what the rich do to make money. For example 90% of people work for money (active income which I talk about in it‘s own article called earned income both fits to me) via jobs in order to get a paycheck. Well the 10% which are the rich don’t work for money but instead they “DO” (which the powerful “DO” is talked about in another article) the opposite. They let money work for them (Passive income which I talk about in it‘s own article) which is why the richest people are the ones in background, that we all don’t see (Ex. Team owners you see the team but not the big cheese owners).

Through ROI rich people stay rich by earning passive and capital gain’s income. So what is ROI? Well it’s an acronym of course of the words Return On Investment. Which means how much money you will be receiving over time or how much cash flow you will receive over time from putting down the money that you have/ paying money (I talk about cash flow in the article “Cash flow- cash flow positive, cash flow negative“). the difference of the cash that you receive annually comes in a percentage and if that % is positive then you are on your way to making a good return. For example if you put down 20,000 dollars on a property and you make 50% ROI annually after expenses have been paid you will be making 10,000 dollars per year of every year. Only if that return is passive. So if that return is passive you will have made 100% ROI in two years which mean all the 20,000 you put down would be made right back and every year after that point you will be making a profit. Which is how the rich stay rich and which is why ROI is very important. Also Cap rate is very similar to ROI. However I think that Cap rate deals with just properties and how much you make per month off of your properties minus expenses and in this example you would be making 4.1…% of cap rate off of this property per day. If you take that number (4.1/100) and multiply it by 20,000 which is the original $20,000 (100% ROI) you’d be making a little over $820 per month of course. So you’d be make quite an amount per month on that property. So how do you calculate ROI well here is the formula that I use. R/T*100=%. R represents the yearly money made from the investment minus expenses, which is the annual money Returned to your pocket.

T represents the Total money you spent on the investment. So with my example the formula would look like this $10,000/$20,000*100=50%. So that is the formula if you ever want to calculate the percentage of your return you will receive annually from an investment. I say if an investment takes 2 years for you to receive an 100% return it is not a worthwhile investment to make (which a 100% annual ROI would look like this $200,000/$200,000*100=100%). However if an investment bears a 70% or more ROI then the investment is worth while and should be taken not just for profit but maybe even for capital gains to, if the investment is a in real estate. Capital gains is the amount you make/profit from selling a property. Sounds a lot like monopoly right? Man I better wrap this up before I start sounding like accounting 101 huh? Well in conclusion ROI can be used to make outstanding investments or it can be manipulated to make even more money. Just remember the rich use ROI to get and stay rich. While the poor and middle class will continue to slide and use things like loans you dig themselves into the carnivore pit.(I explain the carnivores in my article “Good Debt… Bad debt”). So the choice is yours and I leave it to you to make. So which opposite do you want to be in?