From: joetaxpayer 
Newsgroups: misc.invest.financial-plan
Subject: Re: Fresh College Grad
Date: Fri, 19 Jan 2007 15:00:27 -0600
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	JFnD6RDau5Li7BArwKup/cfkepVw+xwxKcioQcH32igqpNLYCrOJQg==
	=iiwu



kastnna wrote:

> I thought all ROI calculations ignored time? That's why they are often
> scrutinized when used. Annualized return does, however, use time.
> 
> ROI = (Gain - Investment costs) / (investment costs).
> If you have $100 and you make $100 your ROI is 100% whether that's over
> 1 second or 1000 years. If you annualize your return then yes the
> numbers are drastically different.
> 
> Wiki also explicitly states that time is not a factor. It does,
> however, state that annualization is often implied because ROI is
> misleading if not put into context.

 From Wiki "ROI does not indicate how long an investment is held. 
However, ROI is most often stated as an annual or annualized rate of 
return, and it is most often stated for a calendar or fiscal year. In 
this article, “ROI” indicates an annual or annualized rate of return, 
unless otherwise noted."

I absolutely see the point, but I purposely used the term annualized 
return for my response. If a return is to ignore time, speed's math is 
correct, but I've never (well, not since two burgers times 19 cents = 38 
cents) had a money problem that didn't include time. And while wiki 
starts with 'does not indicate [time]" it ends with "annualized rate".
JOE