Calculating the weight of various stocks in your investment portfolio can be an important strategy to determine if your investment goals are currently being met. For example, you may wish to pursue a long-term growth plan which involves investment in high-risk foreign stocks. You can calculate the weight of your stocks as a value percentage or as a share percentage. In a value percentage calculation, you use the cash value of the stock. In a share percentage, you perform the calculation using the number of shares of stock, without accounting for value.
Review your account information for your stock portfolio. This information may be available on your broker's website or through paper account statements. Add up the cash value of all of your stocks and write down this number. For example, the total value may be $10,000. Add up the number of shares of stock that you own and write down the number. For example, you may own a total of 3,000 shares of stock.
Determine how you wish to calculate stock weight. You may wish to determine the weight of your high-risk stocks, foreign stocks, domestic stocks or blue chip stocks. You might also want to calculate the weight of a specific stock. For example, add up the number of shares and cash value of all of your foreign stocks. In our example, imagine that the foreign stocks have a total value of $3,000, comprising 250 shares.
Divide your chosen stock's cash value by your overall portfolio's value. In our example, divide $3,000 by $10,000 to get 0.3. Multiply the decimal by 100 percent to obtain 30 percent. This calculation tells you that your foreign stocks have a weight of 30 percent in your overall portfolio. Similarly, you can use the number of shares by dividing 250 shares by the total of 3,000 shares to get 0.083 or 8.3 percent. Thus, on a purely number-of-shares basis, the foreign stock has a weight of 8.3 percent.
- "Financial Accounting Fundamentals"; J. Wild; 2009
- "Stock Investing for Dummies"; Paul J. Mladjenovic; 2009
- "The Neatest Little Guide to Stock Market Investing"; Jason Kelly; 2009