One of the single most crucial concepts and keys to success that I’ve ever learned. This is one of the things I’ll reference the most as well.
It’s actually rather simple: when “principle” (resources of money, time, knowledge, etc) is invested, ROI is how much profit is returned. It’s the ratio to the initial investment that determines the return on investment (ROI).
If I have $10 dollars and invest it, and I make $1 extra so that I have $11 total, that’s a 10% return on investment.
What’s interesting about this principle is that it can be used many, many places. For example: let’s say “Bob” makes $100,000/year at a job. That’s roughly $50/hour (assuming 2,000 hours/year and 40 hours/week). And maybe Bob accidentally spills some food on the floor on the way out the door in the morning, and he needs it cleaned up before it causes permanent damage. But if he stops to clean it up for probably at least an hour, he loses $50, some energy from his day, and the focus and drive he needed to do his best at his job during the most important hours of the day (the morning).
However, if he calls a neighbor down the street who could use some extra cash, and he says “if you can take care of this while I’m gone, I’ll pay $25”. For the neighbor, it’s worth $25/hour which they’re happy about, and for Bob it’s actually worth $50+!
This means Bob can make an at least 100% Return On Investment in the form of value. Because $25 (the principle, what he invested), plus 100% of $25, equals $50 (the value he got from this exchange). And remember that there was actually probably more “returned” than that because he saved his energy and so forth which would have robbed his effectiveness during the rest of his day.
This concept of investing all your resources and looking for the best long term return is CRUCIAL to receiving the rewards of success!