In order to professionally engage in investing in the stock market, it is necessary not only to understand the principles of making a profit, but also to be able to determine the profitability of a particular security. The investor needs to know what potential income he can receive from operations with stocks. Correctly estimating earnings and stock returns requires a certain amount of experience.
It is necessary
- - information about the market value of shares;
- - calculator;
- - a pen;
- - paper.
Instructions
Step 1
To calculate the first type of income received from the sale and purchase of securities, determine the difference between the cost of an individual share at the time of its purchase and the price at which you can sell it at this time. Of course, income is generated only if during the time of holding the shares, their market value has increased, not decreased.
Step 2
Calculate the exact value of the income from the sale of shares taking into account the commission that you will have to pay to the brokerage company for conducting market operations. Usually, transactions with paper assets are not carried out privately, but through intermediaries, which frees the shareholder from performing routine operations that require qualifications.
Step 3
To determine the income received in the form of dividends, be guided by an indicator called the current stock return. This parameter demonstrates what benefit you will get by selling a security at the current market price. Usually, stock returns are calculated over a certain period (half a year or a year).
Step 4
Use the formula for calculations:
D = P / S * 100%, where
D is the profitability of the share;
P - profit for the selected period (the difference between the purchase and sale prices of the stock);
С - the amount of the initial investment.
Step 5
Consider an example of calculating the yield on securities. Let's say on March 1, 2011 you bought shares in ABC at 142.4 rubles. a piece. On August 23 of the same year, the price at which you can sell this asset was 187.2 rubles. Plug these values into the above formula:
D = (187, 2 - 142, 4) / 142, 4 * 100 = 31, 32%.
In other words, during the period of ownership of the share, the yield on it was more than 31%.
Step 6
When deciding to purchase assets in the form of shares of a particular company, always plan in advance what type of income you intend to receive: speculative (the difference between the purchase and sale price) or annual dividend income. This will allow you to build a competent investment strategy for a long period.
