Calculate the return on a stock account
Today we're going to talk about how to calculate the return on a stock account. Investing in stocks is a topic that most people are interested in, but calculating the return is a very important part of it. I hope this article will help you to easily calculate the return and understand how your investments are performing.
1. What is Return?
Return is a measure of how much money you've made on your investment. It's the profit an investor earns from investing in different assets, such as stocks, bonds, real estate, and more, expressed as a percentage.
2. Calculating returns
The formula for calculating the rate of return is as follows
Return (%) = ( (value at the end of the investment - value at the beginning of the investment) / value at the beginning of the investment ) * 100
For example, if you invested $100,000 and ended up with $120,000, what would your return be?
Return (%) = ( (120,000 won - 100,000 won) / 100,000 won ) * 100 = 20
In other words, you've earned a 20% return.
3. Calculate the annualized return
Typically, the return on an investment is expressed as an annualized return. This is because the rate of return varies depending on the length of the investment, so we want to compare returns over a single year.
The formula for calculating the annualized return is as follows
Annualized return (%) = ( (value at the end of the investment / value at the beginning of the investment) ^ (1 / investment period in years) - 1 ) * 100
For example, if you invested $100,000 and it was worth $120,000 after 2 years, what would your annualized return be?
Annualized return (%) = ( (120,000 won / 100,000 won) ^ (1 / 2 years) - 1 ) * 100 = about 9.54%.
In other words, you've earned an annualized return of about 9.54%.
Conclusion.
Calculating returns is very important when it comes to investing in stocks. It helps you understand how your investments are performing and helps you plan your future investment strategy. We hope you enjoyed learning how to calculate the rate of return today. We'll see you in the next installment, and have a great day!
This concludes our explanation of 'Calculating the return on a stock account'. If you have any questions or would like to know more, please leave a comment. Thanks!
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