How to Calculate a Portfolio's Total Return

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Investors keep a portfolio that contains all of their investments. An investor should keep track of the returns on their portfolio. While an investor does not gain any income until they sell some of their investments, the investments can gain or lose money over the course of a period depending on the investments' performance. Properly diversifying your portfolio allows you to balance risks of losing money in one type of investment, so it is important to look at your portfolio as a whole.

Subtract the investment's beginning value from the investment's value at the end of the year to find the investment's income. Do this for each investment in your portfolio.

Add together all the investment income from your portfolio. This is your total income from your portfolio.

Add together all of the investments' beginning values to find your original portfolio value.

Divide the income from your portfolio by your original portfolio value to find the return on your portfolio for the period.

Tips

  • If you want to a more complicated total return analysis, you can factor in changes from the portfolio due withdraws, deposits, interest and dividends at different times in the year instead of just a beginning and ending analysis.

References

About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.

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