Return

Return on investment is calculated by taking the value of the investment held at the beginning of the ROI period compared to the current value. In other words:

((Current Value) - (Beginning Value) + (Income)) / (Beginning Value), where

(Current Value) = (the current total shares) * (the last price),

(Beginning Value) = (number of shares held prior to the period - any shares sold) * (the closing price prior to the period) + the "Cost Basis" of any shares added in this period (Buys, Reinvest, Add Shares, etc), and

(Income) = any income events such as Dividends/Interest (not Reinvested) and Realized gain/loss from Sells in this period.

For example, assume that on 1/1/99 you owned 1000 shares of MSFT (which had been purchased prior to this date), the last price (on 12/31/98) was $69 11/32, and you still own the 1000 shares and the current price is $90 1/8. The ROI (YTD) for MSFT would be calculated:

((1000 * 90.125) - (1000 * 69.34375)) / (1000 * 69.34375) = 20781.25/69343.75 = 29.968%

If you had purchased 200 additional shares at $75 each during this period, the formula would be modified as follows:

((1200 * 90.125) - (1000 * 69.34375 + 200 * 75)) / (1000 * 69.34375 + >200 * 75) = 23806.25/84343.75 = 28.225%

 

 

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