What Is a Good ROI? Benchmarks for Stocks, Real Estate, and Business

"Is this a good ROI?" is one of the most common questions in investing. The answer is always: compared to what?

A 10% return is exceptional for a savings account, average for stock market investing, and disappointing for a high-risk startup. Context determines whether any ROI number is good, bad, or mediocre.

The Baseline: Risk-Free Rate

Every ROI discussion starts with the risk-free rate — the return you can get with essentially zero risk.

In the US, this is approximated by short-term Treasury bills. As of 2026, that's around 4–5% annually.

Any investment that doesn't beat the risk-free rate significantly needs to justify itself. Why take on risk for a 4% return when Treasuries offer nearly the same with no risk?

Stock Market Benchmarks

The S&P 500 has returned approximately:

• 10–11% annually (nominal) over the past century
• 7–8% annually after inflation

This is the standard benchmark for equity investments. If your stock picks or fund manager consistently underperform the S&P 500 index, you're better off in a simple index fund.

What counts as good for stocks:

• Poor: Under 7% annually (underperforms inflation-adjusted index)
• Average: 7–10% annually
• Good: 10–15% annually
• Exceptional: 15%+ annually (Warren Buffett has averaged ~20% over decades — extremely rare)

Individual year returns vary wildly. The S&P 500 gained 26% in 2023, lost 18% in 2022, gained 29% in 2019. Annualized returns smooth out this volatility.

Real Estate Benchmarks

Real estate returns depend heavily on location, leverage, and management.

National averages (US):

• Home price appreciation: 4–5% annually (historically)
• Rental yield: 5–8% gross annually
• Total return (appreciation + rental income): 8–12% in good markets

What counts as good for rental properties:

• Cash-on-cash return under 4%: Usually not worth the hassle vs. passive investments
• 5–8% cash-on-cash: Acceptable, especially in appreciating markets
• 8–12% cash-on-cash: Good
• 12%+: Excellent — often requires significant value-add work

Business Investment Benchmarks

Business investments carry more risk than passive investments and should therefore demand higher returns.

Small business ROI benchmarks:

• Under 10%: Poor — could do better with passive investing
• 15–25%: Good — justifies the risk and effort
• 30–50%: Very good
• 50%+: Excellent (common in high-margin businesses like software)

Venture capital targets 20–30%+ annual returns across a portfolio, knowing most individual investments will fail but a few will return 10–100x.

The Risk-Return Relationship

Higher potential ROI always comes with higher risk. This relationship is fundamental to investing.

When to Accept a Lower ROI

Sometimes lower ROI is worth accepting:

• Liquidity: A savings account at 4.5% is more valuable than a rental property at 7% if you might need the money quickly
• Stability: Bonds at 5% might be appropriate if you're near retirement and can't afford volatility
• Tax advantages: A 6% return in a Roth IRA may beat a 9% taxable return after tax

ROI isn't the only variable. Risk, liquidity, taxes, and time horizon all factor into whether a specific investment makes sense for your situation.

Compare any investment's returns with our ROI Calculator.