Quote:
Originally Posted by **CherryP** Hi
I notice people regularly talk about how much they have made per year in percentage terms for example "I made 20 % return last year"
Can anyone tell me how they calculate this
Is is a simple calculation of capital invested / return on investment
Taking return on investment calculated from gains made from dividends and shares sold minus trading costs and losses ( if any)
Many thanks |
Its very simple Cherry
You're starting capital today is 10,000 you make 1000 today your % return is 1,000/10,000 gives you 10% return today ie (0.1 x 100)
Tomorrow your capital will be 11,000 and you make another 1000 your % return then is 1000/11000 gives you a 9% return the next day.
Your overall capital return is 2,000 and initial capital was 10,000 so thats a 20% return in total.
Were you to included costs in this calculation, you would simply deduct from your 1,000 return and repeat the calculation
hope this helps |