How to Calculate the Declining Value of an Investment

A quick calculation will illustrate how bad an investment is.

A quick calculation will illustrate how bad an investment is.

It's an unfortunate truth that not all investments go as well as you hoped. Even after careful research, you may see stock prices taking a dive, real estate devaluing or businesses going belly-up. You can't know how bad things are until you look at the numbers. By comparing the investment's original and current prices, you can calculate your loss as a monetary value or a percentage of the original investment.

Locate the current and original value of your investment. The original value is your original purchase price. However, the current value may take a little more research. Stock prices are easily referenced on a myriad of websites, but real estate and business investments may require a professional appraisal.

Multiply the investment quantity by the current and original prices to calculate total values. As an example, if you bought 100 shares of stock XYZ for $50, but it recently dropped to $30, multiply 100 times each of the prices. Doing so results in an original value of $5,000, but a current value of $3,000. This step is unnecessary for single-purchase investments, such as real estate.

Subtract the original value from the current value to calculate the current numeric loss. Continuing with the example, subtract $5,000 from $3,000 to calculate -$2,000. The negative sign means you incurred a loss.

Divide the loss by the original investment value and multiply by 100. Doing so expresses your loss as a percentage of the original investment. In the example, divide -$2,000 by $5,000 to get -0.40. Multiply by 100 to convert the decimal figure to -40 percent. The negative sign means you have a loss of 40 percent.

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