What returns are you making off your stock market investments?

Julie Brownlee, Fsp Invest, 09 Sep. 2015

Tags: returns, stock market returns, share returns, how to calculate returns, stock market, investing in shares

Investing on the stock market is all about making money from the shares you buy.

Ideally you want the share price to rise and, depending on the shares you invest in, receive dividends too.

So how can you check how your stock market investments are performing?

Read on to find out…

What are your stock market returns?

The returns you make off your stock market investments is a percentage of the amount of money you put into them in the first place.

To calculate your returns you need to take into consideration the share price and any dividends you’ve received since owning the shares.

It’s a good idea to check this periodically to see how your portfolio is performing. You could set a spreadsheet up for this and update it from time to time.

How to calculate your stock market returns

Let’s use an example to see how you can calculate your stock market returns…

Say you bought 300 shares in Company ABC one year ago as your analysis flagged it up as a good long-term investment. Shares were trading at R150 a share.

This means your initial investment was R45,000 (300 x R150).

Through the course of the year, Company ABC paid out two dividends amounting to R8.

The closing price of Company ABC last night was R175 a share.

To calculate your returns…

  • Work out the difference between the price you paid and the current price. For our example this is R175 – R150 = R25.
  • Add in the value of the dividends received. For our example this is R8, giving us R33 (R25 + R8).
  • Divide this figure by your initial investment to get your percentage return. For our example, this is 22% ((R33/R150) x 100).

You’ve made a return of 22% over the course of the year, rather a good performance.

Of course, until you actually sell your shares, you won’t realise the return on your investments, but it can give you a good idea about how your stock market investments are performing.

So there you have it. How to work out the returns you’re making off your stock market investments.

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