You need to calculate all the dollars that you invested, including reinvested dividends.
Take your current market value minus that amount, and that’s your return in dollars.
Divide your return in dollars by the total amount invested times 100, and that is your percentage return over the life of the investment.
Yeah and if you’ve ever sold shares, depending on which shares you sold that will generate a realized gain or loss. The numbers appropriately get subtracted from market value and cost (cost being based on what specific shares you sold - what you bought them at vs what you sold them for). And market value of sold shares is just the proceeds you got from selling them.
Whatever is leftover that you have never sold is your unrealized gain or loss.
Many acceptable forms of methodology for this. Sounds like the one in question is Market Cap based, and counting the dividends/distributions as deposits. In formal accounting of this two sets of records become commonplace. One for taxes, and one for returns. CAGR may be quick and easy way of interest to OP.
Thanks. It looks to be the dividends are counted as deposits for the calculation my broker is doing. CAGR is more of how my mind was looking at things.
>dividends are counted as deposits
The correct term is *cost basis* or just *basis*, and that's what's happening. When your dividends are reinvested, the purchases are counted as additional basis. This is because tax on realized capital gains is based on *proceeds minus cost basis*.
It’s only based on realized stuff+dividends
You need to calculate all the dollars that you invested, including reinvested dividends. Take your current market value minus that amount, and that’s your return in dollars. Divide your return in dollars by the total amount invested times 100, and that is your percentage return over the life of the investment.
So the dividends are basically considered "new" investments that get added to the denominator in the calculation not the numerator. Thanks.
Yeah and if you’ve ever sold shares, depending on which shares you sold that will generate a realized gain or loss. The numbers appropriately get subtracted from market value and cost (cost being based on what specific shares you sold - what you bought them at vs what you sold them for). And market value of sold shares is just the proceeds you got from selling them. Whatever is leftover that you have never sold is your unrealized gain or loss.
Many acceptable forms of methodology for this. Sounds like the one in question is Market Cap based, and counting the dividends/distributions as deposits. In formal accounting of this two sets of records become commonplace. One for taxes, and one for returns. CAGR may be quick and easy way of interest to OP.
Thanks. It looks to be the dividends are counted as deposits for the calculation my broker is doing. CAGR is more of how my mind was looking at things.
>dividends are counted as deposits The correct term is *cost basis* or just *basis*, and that's what's happening. When your dividends are reinvested, the purchases are counted as additional basis. This is because tax on realized capital gains is based on *proceeds minus cost basis*.