How to Calculate Stock Returns to Get More Money

By | December 25, 2021
How to Calculate Stock Returns to Get More Money

Investing is the right way to develop your assets. There are many investment instruments, one of which is the stock exchange. But don’t always think that you will always be profitable because proper analysis and calculations are needed.

How to calculate stock returns should at least be owned by people who decide to invest their money here.

It’s good for beginners to learn first what a stock is, how to analyze it, and most importantly what is the return calculation.

The most important thing is not to spend a lot of money in the hope of making big profits, because that’s not how it works. For clarity, read this article to the end.

Understanding Stock Return

In accordance with the meaning of the word, namely returns, it can be said that stock returns are what is obtained from the money invested. So, not only in the form of profit but can be a loss. Often also referred to as capital gains or capital losses.

This return is made by the broker to the investor at a certain period or when the funds want to be withdrawn. The money invested plus profits or minus losses, then that is the result of the acquisition during the investment period.

Beginners must understand that in investing, of course there are advantages and disadvantages. To minimize losses, do an analysis before buying shares. The tolerance of the cut-loss point determines whether to pay or not.

Usually, buyers who tend to be aggressive can tolerate up to 15 or 20 percent, so they dare to play in buying shares.

As for beginners, generally do not really want to take risks. Buyers in this moderate category are less interested in buying stocks and prefer bonds as their investment.

However, stock returns are strongly influenced by market sentiment, political conditions, as well as the business and financial performance of the company itself.

So, before buying, do research first. If you are not proficient, use a trusted consultant or broker. Also join with friends who have been playing on this instrument for a long time. It is undeniable, feeling also plays an important role in when to buy and sell.

Factors That Cause Up and Down Stock Returns

Economic conditions are the main factor in price fluctuations on the stock exchange. Macro factors such as inflation, economic growth, and interest rates are some of them. Not to mention the increase in world oil prices and foreign exchange rates that continue to affect stock returns.

While micro factors come from internal companies such as financial conditions, dividend distribution, sales figures, and other things such as how much the company influences. From the outside, political and economic conditions also affect the size of the return.

Before buying stocks, it is advisable to dig up a lot of information about the things above. Calculating returns will be an easy matter if you understand very well what causes returns to fall or increase. Even when you buy blue chip stocks, losses can occur.

The phenomenon that occurs in today’s society is that many players also rely on references from people who have been playing stock trading for a long time.

For example, the recommendation from Kaesang Pangarep about buying Antam’s shares proved to be effective in making a lot of people profitable. Or also buy what Ustad Yusuf Mansur bought.

Things like this are okay because all the information proves to be very useful when people want to maximize the profits from buying stocks. But it would be nice to also train your own analytical skills so that the feeling for when to buy and sell is stronger.

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How to Calculate Stock Return

Knowledge of the calculation of capital gain or loss must be possessed to minimize losses and maximize funds.

In the following, a simple example will be given so that beginners first understand how the basic return occurs.

1. Advantage

Profit or capital gain occurs when there is an increase in the value of the stock. For example, last year the value of stock purchased was 1000 per share. But now, a year later, it’s been 1500.

If you have bought 2000 shares, it means that the buyer gets a gain of 500 each plus dividends. This difference is the cuan.

When the value goes up, it’s a good time to resell it. Beginners tend to wait until the maximum increase without taking into account market analysis.

As a result, when the stock price drops he has to suffer losses. There is a term “don’t be greedy when playing stocks”, so when you feel it is profitable enough, it’s better to sell what you have.

2. Losses

As described above, playing in investment instruments is not always profitable. There are times when the value of the stock drops and the buyer loses. But don’t be in a hurry to sell the assets that have been purchased because this is the time to buy again.

In solid companies, ups and downs are common. Look at his portfolio over the past year, if the trend is positive, then it’s certainly still safe.

Well, then how is the calculation of this capital loss or loss?

Just use the example case below, then reverse the situation. If the buyer buys 2000 shares at a price of 1000 and now it drops to 500, there will be a loss of 500 Rupiah per share.

Loss tolerance varies from person to person. As explained above, the feeling of buying and selling will soon form itself.

In addition to the general calculation above, there is also a calculation based on the type of stock return. There are at least two types, namely, realized returns and expected returns. From both have their respective derivatives and calculations.

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Calculating Realized Return

Also called historical return because of the way it is calculated by calculating the price difference from the history of the company. This history serves as a measuring tool for the company’s performance to predict risks and expectations in the future. The calculations use the principles of arithmetic and geometry.

There are four types of realized returns, namely total, cumulative, relative returns, and adjustments. Everything is calculated based on the company’s performance in a certain period. Calculating it by sub
tracting the current stock price minus the price of the previous period, we get a certain time return.

Calculation of Expected Return

If the realization return is based on the company’s performance as a benchmark, then this time, the return is calculated based on how much profit you want to get later.

The calculation is simple, namely by entering the profit level in the market for a certain period. As a result, there will be a percentage gain or even loss on the shares that have been purchased.

Advantages of Knowing How to Calculate Stock Return

Knowledge of how to calculate returns is very important to measure how much profit and loss investors will get. The company also does this calculation because they still have to keep the stock price high. Fluctuations that are too sharp are also not good for the company’s portfolio because it makes buyers lose confidence.

Mastering the problem of calculating returns is also important for decision making. Investors need to know how to calculate returns so that they can predict whether the shares they own can make a profit.

If you have started to lose, then there are two options to sell with a small loss, or hold on to be able to buy again. When the price goes up, he earns even more.

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Those are some ways to calculate stock returns that beginners can try. It is recommended not to spend a lot of money first when you just start playing. There are shares that can be purchased starting from Rp. 50,000 even Rp. 10,000.

Good luck!