How can I calculate the total return on my stock investment?

To calculate the total return on a stock investment, use this formula:

Total Return = [(Selling Price - Purchase Price) + Dividends] / Purchase Price × 100

For example, if you buy a stock at ₹500, sell it at ₹700, and receive ₹20 in dividends, the return would be:

Total Return = [(700 - 500) + 20] / 500 × 100 = 44%

This formula helps investors determine their actual profit from stock investments.

1. What Is Total Return?

Total return represents the overall profit from a stock investment, including capital gains (price increase) and dividends received over time.

2. How to Calculate Total Return?

Follow these steps to calculate total return:

• Step 1: Identify the stock's purchase price.
• Step 2: Determine the selling price.
• Step 3: Add any dividends received.
• Step 4: Apply the formula: (Selling Price - Purchase Price + Dividends) / Purchase Price × 100.
• Step 5: Analyze the percentage return.

3. Factors Affecting Total Return

• Stock Price Movement: A higher selling price increases returns.
• Dividends: Regular payouts add to the total return.
• Holding Period: Long-term investments often yield better returns.
• Market Trends: Economic conditions influence stock performance.

4. What Is a Good Total Return?

A good return varies based on investment duration and market trends:

• 10%-15% Annually: Considered strong for long-term investors.
• 20%-30%: Achievable with high-growth stocks.
• 50%+: Possible in booming markets but carries risk.

5. Conclusion

Understanding total return helps investors measure stock performance. A mix of capital appreciation and dividends can lead to strong investment growth.