How to Calculate Investment Performance

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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
  • Statement
  • Calculator
  • 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.

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