When you review your investments, it’s important to remember that the income and returns come from two main sources, capital gains and middle income.
capital gain (or loss)
This is the difference in the overall value of your investment from when you bought it and now you can work on as (or the date you sold.):
((Current price or sales per unit – purchase price) * number of units) – fees and taxes
For example, assume you bought 100 shares of incredible blue Widget Co. for $ 50 each and sell them for $ 80 each. You had to pay $ 10 to buy, $ 10 on sale and 15% income tax, it would work to: (($ 80 – $ 50) * 100) – $ 20 – $ 450 = $ 2430 or a return 48.6% on your original $ 5000 investment.
middle income (dividends, interest, etc.)
This is the amount you have received interim payments over the life of your investment. It is calculated as follows:
(Provisional value *% of investments) – Taxes
You would need to work on that for each interim payment you receive.
For example, suppose you have held 100 ABWC shares for three years and paid dividends of 3% per year; in the first year, the shares were $ 50 each, in the second, $ 60 and third $ 80 each. Your return would be 3% of $ 5000, $ 6000 and $ 8000 less tax; this works: $ 485.
Your total return
This corresponds to your capital gain (or loss) over your middle income. You can then compare your original purchase price to understand what percentage of gain or loss you have made.
For example, your purchase price of ABWC shares was $ 5000; over three years, you made $ 2430 in capital gains and $ 485 in the interim statements (dividends) for a total of $ 2915. This is an increase of 58.3% over three years, or 19.4% annually – not bad!
You should compare your total return your targets and goals in life. This can help you decide if you should keep your investments, or whether it would be wise to sell them.