How Do I Calculate Returns on My Investment?


Q: How do I calculate ROI for a given time period?

In the simplest terms, returns can be calculated by dividing the change in value by the original value.

Let’s say you purchase 20 shares of a stock for $10 apiece on January 1. On January 31, those shares are worth $11. To calculate your January returns, start by measuring the difference between your starting value ($200) and ending value ($220). In this case, the total value of your purchased shares grew by $20. Divide that growth by the original value to learn your total returns ($20/$200 = 10 percent). You can repeat this calculation to figure out your returns over any period of time, including year to date or portfolio inception to date.

But remember: If you’re paying fees to a broker or enlisting the services of a wealth manager, it’s important to make a distinction between returns that are “gross of fees,” meaning fees haven’t been considered at all, versus “net of fees.”

Let’s take the example above: If you were working with an advisor to purchase those 20 shares, and that person charged a $5 monthly fee, you can calculate your net-of-fees return by subtracting that $5 from the growth in value, then dividing by the beginning value ($20-$5)/$200 = 7.5 percent). So, when investing, it’s important to take fees into account, too.

Grow Financial Advisor Panel participants are responsible for the content expressed and do not necessarily represent the views or opinions of Acorns Grow, Inc., Acorns Securities, LLC or Acorns Advisers, LLC. Content is provided on an informational basis and should not be construed as investment advice. Individual circumstances will vary. Please consult a financial advisor before acting on any opinions expressed. Participation in the panel is voluntary. Editing of advisor responses is for brevity and clarity; no editorial privilege is exercised.

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All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

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