How to Calculate Investment Income

Investment income can come from a number of sources, such as dividends, capital gains, interest payments and any other return made from an investment. With discipline, it is possible to grow your savings into a moderate investment portfolio with a large annual investment income.

Difficulty: Moderate

Instructions

How to Calculate Investment Income

1. Gather your information. Pull together all paperwork from your investments. If you have multiple investment vehicles, you will need to know the income stream from each investment as well as how much you paid for the investment.

2. Understand the equation. The percentage of return you make from each investment vehicle is called a yield. A yield is calculated by dividing income by the amount of the investment.

3. Create a spreadsheet in Excel. Create three columns. In Column A, put "Investment." In Column B, put "Income Generated." And in Column C, put "Amount Paid." List all of your investments with the associated information.

4. Create a Column D called "Yield" to the right of Column C. Create a formula in Column D that divides Column B by Column C, or "Income Generated" by "Amount Paid."

5. Take the average of Column D. This is your investment-income percentage. To calculate a dollar amount, take the sum of Column B, or "Income Generated."

Tips & Warnings

• Don't forget to take taxes into consideration if this is not for an IRA or 401k.
• This is not to be construed as investment advice.

Resources

• Vanguard Investment Income Calculator
• Free Income Ladder Calculator
• More on Investment Yield Calculation