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Investment Calculations

Hello,

I know this has been probably asked before, but the threads I have found do not seem to answer my question exactly. I want to know what the calculation is for Gain/Loss (%) and how it is differs from ROI (%). I found this page: https://help.quicken.com/display/WIN/Tell+me+about+key+investment+performance+calculations+used+in+Quicken But it does not explain the Gain/Loss (%) calculation.

My limited research tells me the difference between the two are dividends. If correct, I am still unclear as to why an ETF that I bought less than 30 days ago has a ROI of 5.8% and a Gain of 5.4% when no dividends have been paid. Leaves me scratching my head as I would expect them to be the same.

I would like someone with the knowledge to please spell it out for me. Gain/Loss (%) is this and ROI (%) is that.

Thank you for your response. Please do not replay just to say you have the same issue.


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Answers

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    They are quite different "animals", and it isn't just the dividends.

    Gain/Loss (%) = ((Current Value / Cost Basis) - 1) * 100

    You will notice that in the above calculation above that it varies directly depending on the cost basis. And that will change if you sell shares.  But look at this statement about ROI.

    "Amount invested doesn't decrease when you sell shares; cost basis does. If calculations such as ROI appear lower than you would expect, it could be because the amount invested includes the cost of shares you no longer own."

    I (invested) accumulates for the account for any shares you buy.
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  • Chris Anania
    Chris Anania Mac Beta Beta
    edited January 16
    Got it. So the difference is gain/loss uses cost basis where as ROI uses amount invested. Ty!
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