How to Know If You Made Money in the Stock Market

You can make money in the stock market.

The two primary ways to make money in the stock market are dividends and share price appreciation. The more earnings the company makes, the higher the dividends and the higher the stock. The amount of money you make from your investment is a function of how much money you made from your initial investment. The most common ratio used to measure stock market performance is return on investment (ROI).

Difficulty:

Easy

Instructions

Things You'll Need

• Calculator or spreadsheet

1. Determine the amount of money you paid for the initial investment. This is the total cost of the investment. So if you invested $10,000 in the stock market, this is your initial investment.

2. Determine the current value of your stock account. This should be on your financial statement. Contact your financial adviser if you are not receiving monthly statements. Let's say the value of your account is $12,450 a year later.

3. Determine the amount of dividends received over the past 12 months. This should also be on your account statement. Add this to your current account value. Let's say you received $1 over the past year.

4. Subtract the initial investment value from the current account value plus dividends. The calculation is $12,450 - $10,000 + $1 or $2,451.

5. Divide the difference (Step 3) by the initial investment value. The calculation is $2,451 / $10,000 or 24 percent.

6. Interpret the results. If the result is positive, you made money in the stock market. If the results are negative, you lost money. A 24 percent increase means you made money in the stock market.

References

• Investopedia: ROI