Track Investments
August 9th, 2006
Question: Calculate Rate of Return On Investments?
I am an investor in stock market and invest unequal amounts every month, I keep a track of investments I added to my portfolio as well as value of my portfolio at the end of the month, my investments are for both long term and short term. I want a method to calculate Annual return on my portfolio with varying amounts invested throughout the year. This would be similar to how mutual funds would determine growth rate of their funds although investments are added every month, Hope I am clear with my question,
Thanks,
Answer: Well, it is pretty easy, just sum up all the value of your investment divide it by the no of unit you have, you will get the average per unit of the stock.
Every year at the time you specified, you can check on the price of the stock and divide it with the average price per stock and you will get the annual return with the varying amount.
Example – invested all in same stock:
Month 1, invested $100 for 10 Stock
Month 2, invested $ 200 for 23 Stock
Month 3, invested $ 90 for 15 Stock
Month 4 – Current Stock Price per unit $ 13
Average Price per unit=
(100+200+90)/(10+23+15)=
390/58= 6.7
Return = (13/6.7 – 1) *100 = 94%
Thats it. Hope this is clear
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