Simple Steps to Calculate Your Investment’s Percentage Gain
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Tracking your investment’s performance is essential for making smart financial decisions. One key metric to monitor is percentage gain, which shows how much your investment has grown over time.
Understanding your returns helps you assess profitability. By measuring gains accurately, you can refine your strategy and make informed choices for future investments.
Determine Initial and Final Value
To find the percentage gain of an investment, one must first determine the initial and final values.
- Initial Value: This is the price paid for the investment at the beginning. For example, if someone bought a stock for $50, that’s the initial value.
- Final Value: This is the selling price or the current value of the investment. If the stock is now worth $75, that’s the final value.
Tracking these accurately is crucial for measuring growth. Apps like Investor 2.4, indicated in the post below, helps investors track performance, analyze risk, and seize new opportunities with ease:
Calculate the Absolute Gain
To measure your investment’s growth, start by finding the absolute gain. Subtract your initial investment from the final value. If you invested $5,000 and it grew to $6,500, the absolute gain is $1,500. If the final value is lower than the initial investment, the result is a loss.
Understanding the absolute gain helps you see how much your investment has increased in raw numbers. This step is crucial before converting the gain into a percentage.
For a clear explanation of both gains and losses, watch the video that walks through the process in simple terms:
Convert to Percentage Gain
To find the percentage gain, take the absolute gain and divide it by the initial investment. Then, multiply by 100.
For example, if your gain is $1,500 from an initial $5,000 investment, the calculation is (1,500 ÷ 5,000) × 100 = 30%.
This percentage helps compare returns across different investments. A percentage-based view provides clearer insights into performance.
Online tools can simplify these calculations, such as the SIP Calculator below:
It helps estimate returns over time, particularly for mutual funds, but its percentage-based calculations can be useful for tracking various types of investments.
