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How to Calculate Your Investment Returns

If you haven’t deposited money into or taken any money out of your brokerage account, it’s relatively easy to measure your rate of return for the year. Just follow these steps:

  1. Get your account balance at the end of the year and write it down.

    You can get your year-end balance from your online broker’s Web site or from a printed statement.

  2. Get your account balance at the end of the previous year and write it down.

    Again, this information is available from your broker’s Web site or from a printed statement.

  3. Subtract the answer in Step 2 from the answer in Step 1. Divide that difference by the answer in Step 2 and then multiply by 100.

    Say your portfolio was worth $10,000 on December 31, 2009, and it was worth $12,000 on December 31, 2010. You would subtract $10,000 from $12,000 and get $2,000. Divide $2,000 by $10,000 and multiply by 100, and the answer is 20 percent. You earned a 20 percent rate of return in that year.

Don’t worry about dividends and splits when using this approach. And don’t concern yourself if you’ve bought or sold stocks. As long as your dividends and sale proceeds go into the brokerage account, this way of calculating your return reflects all these things.

If you don’t care to know how portfolio returns are measured and just want to do it online, go to MoneyChimp’s Portfolio Performance Calculator. It automatically calculates your portfolio’s return if you enter your portfolio’s beginning and ending balance and indicate whether you deposited or withdrew money.

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