# How to Calculate the Average Yield on Investments

Even the best investors have some losers in their portfolio, and even the worst stock pickers will usually have a few winners in theirs. Rather than just looking at a few star investments or a few underperformers, you can calculate the average return across the entire portfolio. To find your average yield, you need to know your total investment and how much the investments are worth now.

## Calculating the Average Yield for a Portfolio

To find the average yield on your investments, first, calculate the total initial investment in the portfolio. Second, calculate the total value or proceeds, such as dividend payments, from all of the investments over the time period you are interested in. Third, subtract your total ending value from the initial investment to find your gain or loss. Fourth, divide the gain or loss by the ending value to calculate the average yield as a decimal. Finally, multiply the result by 100 to convert it to a percentage.

For example, say you started out with \$200 in Stock A, \$300 in Stock B and \$500 in Stock C. Over a few years, you receive \$100 in dividends from Stock A and Stock A is increased by \$100, Stock B is unchanged and Stock C has gone down by \$100. To find your initial investment, add \$200 plus \$300 plus \$500 to get \$1,000. To find your total value add the \$100 in dividends to the \$300 current value of Stock A, \$300 current value of Stock B and \$400 current value of Stock C to get \$1,100. Third, subtract \$1,000 from \$1,100 to find your gain is \$100. Fourth, divide \$100 by \$1,000 to get 0.1. Finally, multiply 0.1 by 100 to find your average yield across the three investments is 10 percent.

## Don’t Average Individual Investment Returns

While it may seem easier to just average the investment yields of the different stocks in your portfolio, that won’t get you the right answer unless every investment has exactly the same initial investment. Instead, larger investments will be underweighted and smaller investments will be overweight.

In the example above, Stock A generated a 100 percent return because the \$200 investment generated \$200 in returns. Stock B generated a 0 percent return because it was unchanged. Stock C went down by 20 percent because it lost \$100 of the \$500 initial investment. Averaging a 100 percent return, 0 percent return and negative 20 percent return generates an average of 26.67 percent – which is not what you actually achieved.

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