Investors want one thing: return. The amount of return you get on your stock portfolio lets you know how successful your stock picks have been. The higher the rate of return, the better your stock picks. If you're a financier, computing a rate of return is second nature. But if you're new to investing, calculating the rate of return may seem like a complicated process, yet it's really very simple.
Instructions
1. Review the definition of return. According to Investopedia, this is the gain (or loss) on an investment over a certain time period. This amount is usually expressed in percentage terms. The actual formula is:
Return = (ending portfolio value - beginning portfolio value)/beginning portfolio value) times 100.
2. Walk through an example. Let's assume you purchased stock for a portfolio that acquired a value of $1,000. One year later you decide to sell your stock at market value. The market value of your portfolio is now $1,500.
3. Calculate the rate of return. The formula is: ([$1,500 - $1,000] / $1,000 ) times 100 = 50. The rate of return on your portfolio is 50 percent.
