Understanding investments and how they are performing is a key part of making sure the investments are a sound choice. It is smart to examine how a prospective investment has performed. It is also wise to review existing investments to determine if they are performing according to expectations. Calculating investment performance is simple.
Things You'll Need
- Index performance history
- Investment history
Determine the period of time to review the investment performance. This may be a month, quarter or annual time frame.
Take the price of the investment at the start of the term. If there was a fee associated with purchasing the investment, prorate this by the number of shares purchased, attributing a real cost of the purchase.
Take the price of the investment at the end of the term and divide it by the price determined in Step 2. This will give you the percentage it has increased or decreased. Example: XYZ stock was purchased for $50, and the end price was $55. Divide: 55 / 50 = 1.1. Multiply 1.1 by 100 to determine the percentage. This means the stock increased to 110 percent of the initial price, or a 10 percent increase for the term.
Determine the performance of the benchmark category your investment falls into. If this is a large-cap stock, the benchmark would be the Dow Jones Industrial Average. Compare the same time frame to see how the investment performed against similar investments.
Compare the increase to a benchmark index. Subtract the benchmark performance in Step 4 to the security performance in Step 3. This is how the security compares with similar companies under the same market conditions.
How to Use Excel To Calculate Investment Portfolio Returns
Excel contains an internal rate of return formula that calculates your annual portfolio return rate.
- How to Calculate KPI
How to Calculate Performance on Derivatives
A derivative is a security whose performance is linked to price movements of underlying securities, assets, commodities or indexes. Derivatives are used...
How to Calculate Unit Trust Performance
A unit investment trust or a UIT is a trust that incorporates the savings of a large number of investors. The fund...
How to Calculate the Average Return of a Stock
Calculating the average return of a stock is no different than calculating the average of any other set of values. The sum...
- How to Calculate Performance Attribution
How to Calculate a Portfolio Performance
Portfolio analysis is a tool investors use to measure the performance of their investments. Investors might want to measure the overall performance...
How to Calculate a Simple Return on Investment
When you invest in mutual funds, the mutual fund company provides an annual report for each fund that details its performance over...
How to Calculate Investments
No matter what you do for a living or where you are in your career, you need to put money aside for...