How to Figure Percentages on Investments

by C. Taylor

Several useful percentages may be calculated for investments. Calculating a percentage of your total portfolio's value allows you to see how much of your portfolio is comprised of particular stocks or types of investments. Percent returns allow you to calculate the productivity of an investment by measuring its growth relative to your initial returns. In the likely case that your investment term is not exactly one year, calculating the annualized percent return allows you to compare your investments without bias of investment duration.

1. Divide the value of an individual stock or investment type by the total portfolio value to calculate its percent contribution to your portfolio. As an example, if stock XYZ totals $2,000 in value, and your portfolio's total value is $20,000, then divide $2,000 by $20,000. This tells you that stock XYZ comprises 0.10 of your portfolio. To convert this number to a percentage, multiply by 100, for a total of 10 percent.

2. Subtract the final value of an investment from the original investment amount, then divide this figure by the original investment amount. This gives you the overall percent return. For example, if stock XYZ's is now worth $2,000 and was originally purchased for $1,400, you divide the difference of $600 by $1,400 to get a return of 0.42857, or 42.857 percent.

3. Add 1 to the return, in decimal form, and raise this figure to the nth power, where "n" is the number of investment periods in a year. Subtract 1 to calculate your annualized return. Calculate the number of investment periods by dividing 365 by the total number of days you held the investment. This works whether the investment term was less than or greater than a full year. Continuing with the prior example, if you held stock XYZ for 18 months, or 540 days, you would divide 365 by 540 to calculate an "n" of 0.6759. Raise 1.42857 to the power of 0.6759 to calculate 1.2726. Subtracting 1 and converting to percent format gives you an annualized return of 27.26 percent.

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