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Investment Basics – Understanding Your Gains And Losses

October 26, 2016 | Author: | Posted in FINANCE

When you’re reviewing your investments, it’s important to remember that income and returns come from two main sources, Capital Gains and Interim Income.
Capital gain (or loss)

This is the difference in the overall value of your investment between when you purchased it and now (or the date that you sold it.) You can work it out as:

((Current or sale price per unit – purchase price) * number of units) – fees and taxes

For example, let’s assume that you purchased 100 shares of Amazing Blue Widget Co. for $50 each and then sold them for $80 each. You had to pay $10 to buy, $10 to sell and 15% tax on the profit, this would work out to: (($80 – $50)*100) – $20 – $450 = $2,430 or a return of 48.6% on your original $5,000 investment.
Interim income (dividends, interest etc.)

This is the amount that you’ve received in interim payments over the life of your investment. It’s calculated as:

(Interim % * value of investment) – taxes

You would need to work this out for each interim payment that you receive.

For example, let’s assume that you’ve held 100 ABWC shares for three years, and that they paid dividends of 3% a year; in the first year the shares were $50 each, in the second, $60 each and in the third $80 each. Your return would be: 3% of $5,000, $6,000 and $8,000 less tax; this works out to: $485.
Your total return

This is equal to your capital gain (or loss) plus your interim income. You can then compare this to your original purchase price to understand what percentage gain or loss that you’ve made.

For example, your purchase price of ABWC shares was $5,000; over three years, you’ve made $2,430 in capital gains and $485 in interim returns (dividends) for a total of $2,915. That’s an increase of 58.3% over three years, or 19.4% a year – Not bad!

You should compare your total return to your targets and life goals. This can help you decide if you should keep your investments, or if it would be wise to sell them.

– – For any inquiry : http://www.zenithfinance.com.au/contact/

Business Details:

Zenith Finance Company, Australia
Phone: 1300 288 874
Fax: (02) 8088 7300
Email:sales@zenithfinance.com.au
Web: http://www.zenithfinance.com.au/

Address:
Level 11, 117 Clarence Street
Sydney NSW 2000

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Zenith Finance, expert business equipment finance brokers, insurance mortgages for small, medium business in Sydney, Melbourne, Brisbane, Australia. Smart, fast financing for your construction and industrial, office or retail equipment needs. Low rate equipment and fitout loans for medical and health professionals. Expert advice and low rate financing on your business cars, forklifts and heavy vehicles. Add value by offering your clients competitive financing on business equipment or vehicles. About Zenith Finance : Zenith Finance, expert business equipment finance brokers, insurance mortgages for small, medium business in Sydney, Melbourne, Brisbane, Australia. Smart, fast financing for your construction and industrial, office or retail equipment needs. Low rate equipment and fitout loans for medical and health professionals. Expert advice and low rate financing on your business cars, forklifts and heavy vehicles. Add value by offering your clients competitive financing on business equipment or vehicles. We are independent finance and mortgage advisers. We take the headache out of finding, understanding and choosing loans and leases from banks and other financial institutions. And we negotiate on your behalf to get you the best possible rate and benefits. Zenith Finance was established in 2000 by Director Richard Korda. Our expert team brings together a potent brew of knowledge and skills from all corners of the finance industry. Added together (sorry, we can’t help number crunching) and you have close to 80 years of business and property financing experience on demand. In short, yes, Zenith Finance has an ACL registration number 389877. Richard Korda ::: Richard has been working in the finance industry since 1993. In February 2000 he started Zenith Finance to make smarter business finance plans accessible and easy-to-understand for small and medium sized Australian companies. Since then, Richard has arranged over 4000 commercial finance transactions. There’s nothing he’d rather be doing than helping Australian business owners get the right financing they need to reach their goals and dreams. Contact Richard on 1300 288 874 if you need some expert help with commercial property finance or equipment finance loans.

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