My Math Forum How do I find the Return on Investment of a stock I bought in 3 increments?

 Algebra Pre-Algebra and Basic Algebra Math Forum

 December 16th, 2017, 11:06 PM #1 Newbie   Joined: Sep 2016 From: Florida Posts: 17 Thanks: 0 How do I find the Return on Investment of a stock I bought in 3 increments? Let's say I bought 100 shares 43 days ago at 50/share. Then I bought 50 shares 35 days ago at 60/share. Then just bought 300 shares 2 days ago at 80/share. And it's now worth 85/share. How do I figure annualized ROI as one number? Last edited by farmerjohn1324; December 16th, 2017 at 11:10 PM.
 December 17th, 2017, 05:54 AM #2 Senior Member   Joined: May 2016 From: USA Posts: 1,310 Thanks: 551 The simple answer is that you can't. Return on investment measures the amount of gain on an investment. You are talking about three different investments. That answer, of course, is too simple to be correct. You can make up any definition you want and calculate a number. Whether that number makes any financial sense will depend on the definition. If I had to do it, I would probably calculate all three rates of return and then calculate a weighted mean using the different amounts invested as weights.
December 17th, 2017, 06:03 AM   #3
Math Team

Joined: Oct 2011

Posts: 14,597
Thanks: 1038

Quote:
 Originally Posted by farmerjohn1324 Let's say I bought 100 shares 43 days ago at 50/share. Then I bought 50 shares 35 days ago at 60/share. Then just bought 300 shares 2 days ago at 80/share. And it's now worth 85/share. How do I figure annualized ROI as one number?
Are ALL the 450 shares now worth 85?
If so (roughly speaking):
you spent 32,000
you can sell for 38,250
over a year: 6250/32000 = .1953...~19.5%

I ain't getting trapped with your "days"...I'll let Joppy do that

December 17th, 2017, 09:39 AM   #4
Newbie

Joined: Sep 2016
From: Florida

Posts: 17
Thanks: 0

Quote:
 Originally Posted by JeffM1 The simple answer is that you can't. Return on investment measures the amount of gain on an investment. You are talking about three different investments. That answer, of course, is too simple to be correct. You can make up any definition you want and calculate a number. Whether that number makes any financial sense will depend on the definition. If I had to do it, I would probably calculate all three rates of return and then calculate a weighted mean using the different amounts invested as weights.
I'm going to weight it, But I think I'm doing it differently.

On this picture, the top number is the # of days since initial investment, and the bottom is the amount of money I put in at that time (the weight).

How do I find the number (from 0 - 41) that is the answer when weighted?
Attached Images
 1217171301.jpg (94.8 KB, 1 views)

December 17th, 2017, 01:16 PM   #5
Senior Member

Joined: May 2016
From: USA

Posts: 1,310
Thanks: 551

Quote:
 Originally Posted by farmerjohn1324 I'm going to weight it, But I think I'm doing it differently. On this picture, the top number is the # of days since initial investment, and the bottom is the amount of money I put in at that time (the weight). How do I find the number (from 0 - 41) that is the answer when weighted?
I don't get weighting it by days because the number of days involved when you calculate an annualized return already takes the difference in number of days into account. So weighting by days and not be dollars ignores one difference and double-counts the other difference.

 December 17th, 2017, 03:24 PM #6 Math Team   Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,597 Thanks: 1038 Or assume your 3 purchases were deposits in a savings account. The 1st one made Jan.1st. You know (apparently) what the year-end (Dec.31) value will be. Calculate the interest rate that results in that year-end value.

 Tags bought, find, increments, investment, return, stock

 Thread Tools Display Modes Linear Mode

 Similar Threads Thread Thread Starter Forum Replies Last Post farmerjohn1324 Algebra 8 August 18th, 2017 09:32 PM Chikis Elementary Math 2 May 8th, 2013 05:38 PM Oranges'n'Lemons Economics 2 February 21st, 2012 08:36 AM nastenka Economics 0 December 24th, 2009 01:12 PM Redcapnyc Economics 3 March 17th, 2009 08:42 PM

 Contact - Home - Forums - Cryptocurrency Forum - Top