How to Calculate the Declining Value of an Investment

by Mark Kennan, studioD

When an investment declines, you can measure the loss in total dollars, however most people measure the results in terms of a percentage of the original investment. The loss in dollars allows you to adjust the bottom line for the decline in value. Knowing the loss rate and the percentage loss allows you to view your loss relative to the amount you invested. For example, a $50 loss is insignificant if you invested $70,000. But if you only invested $150, then you've lost one-third of your original investment.

Subtract the final value of the investment from the initial value of the investment to calculate your loss on the investment. For example, if you invested $800 in a company and its values decreased to $760, subtract $760 from $800 to find you have a loss of $40.

Divide the loss on the investment by the initial investment to calculate the loss rate. In this example, divide the loss of $40 by the initial investment of $800 to find a loss rate of 0.05.

Multiply the loss rate by 100 to find the loss expressed as a percentage. Completing the example from the previous step, multiply the loss rate of 0.05 by 100 to find the loss equals 5 percent.

About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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