Calculating Stock Returns

If you are one of the few people lucky enough to earn a return on your stock investments you might be wondering how to calculate your stock returns. It is a valuable skill to know because it allows you to figure out well ahead of time what you will owe in capital gain taxes. It also helps you see how worthwhile your investment was, and if another investment choice should be considered.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Calculator
• Stock purchase price
• Stock sale price
• Fees

How to Calculate Stock Returns

1. Log on to your investment brokerage account, or gather your monthly statements.

2. On your brokerage account, find your trading history page, or open up your monthly statement.

3. Find the purchase price of the shares in question and multiply that price by the number of shares you bought. Place that in one column on a spreadsheet or notepad.

4. Find the sale price of that security, and multiply it by the number of shares sold at that price. If you have multiple buys or sells, you will have to do this for each transaction.

5. Subtract the total dollar amount of the purchase (number of shares plus purchase price) from the total sale price (number of shares plus the sale price). The result is your stock gain.

Calculating Total Gains with Fees and Taxes

6. Add the transaction fee for the purchase price and sale price together. For multiple purchases and sales, add all the related transaction fees. Each fee should be listed in your purchase and sale history on your monthly statement or in your brokerage account online.

7. Subtract this amount from the total gain that you found in section one of this article. This is your total gain. (NOTE: These fees may be included in the entire purchase or sale price depending on how your broker reports your buys and sells.)

8. Multiply your total gain by the percentage of capital gains taxes you will have to pay. Contact your accountant if you are unsure of what this will be.

9. Subtract the amount of taxes from your total gain to find the full return on your investment.

Tips & Warnings

• Calculating taxes is not straight forward because your losses on other investment will affect the total amount of taxes you will have to pay. Capital gains taxes change depending on your income level and other factors.
• Do not add fees to your sale price if your broker includes fees in the final sale price they report to you. You can change this option of reporting on most brokerage accounts. A true cost basis accounting method usually does not include the fees.

Resources

• Tips on calculating returns
• More information on stock returns