Investing Basics

Calculating Returns

Individuals make investment decisions with the intention of making more money. In order to ensure that this happens, it’s important for investors to calculate their investment returns.

A simple way to calculate investment returns is to use the return on investment (ROI) formula, which is: Net Profit ÷ Cost of the investment × 100. The outcome of this calculation will be the investors % return.

In order to get an accurate ROI figure, individuals should remove expenses (such as transaction fees) from the net profit figure. Usually investors pay a fee for buying and a fee for selling investments.

For the purpose of measuring performance, it’s necessary to calculate the % return for each year, which can be done by dividing the ROI % by the number of years that the investment has been held for.

Copyright © 2021 Methodology

That's wrong - try again!