Calculating Interest 8: Another ROE

Last time, we looked at the difference between return on investment (ROI) and return on equity (ROE). There is another ROE that’s worth looking at.

One of the most important calculations is Return on Effort.

If I buy something for $1, and sell it one year later for $2, I just doubled my money. That’s a 100% return!

But let’s say that deal took one hour of my time. Is one hour worth only $1 in profit?

If I buy something for $1,000,000, and sell it one year late for $1,010,000, I just made $10K. That’s only a 1% return.

Again, let’s say it only took one hour of my time. Is one hour worth $10K in profit?

Which return is better? Which return is more worth my time?

ROI isn’t everything. You need to factor in your time and effort.

What do you think?
Joseph

This is a series. Here is the previous post.