The Smarter Path to Financial Returns

The PSA Blog

Helpful news, tips and business advice for small to medium business owners about how to maximise profit, minimise waste and grow and protect your business.

Discover how to calculate your investment returns with PSA Capital Investments.

How Do I Work Out My Investment Returns?

Investing wisely is about understanding not just where to place your money, but how those investments perform over time. For investors seeking clarity and efficiency in their investment journey, calculating returns is essential. At PSA Capital Investments, we simplify the complex, ensuring our investors can track and understand their returns with ease.

Understanding Return on Investment (ROI)

Return on Investment (ROI) is a basic measure used to evaluate the effectiveness of an investment. It calculates the percentage of money earned or lost on an investment relative to its cost. By comparing the gain or loss from the investment against its initial cost, ROI provides a clear indication of how profitable your investment has been. This makes it easier to understand whether the money you’ve put into something has actually paid off.

ROI Example

Here’s how ROI works with a simple example: Suppose you invest $100 and earn a profit of $100 from that investment. Your ROI would be 1, or 100% when expressed as a percentage. This figure effectively tells you that you’ve doubled your initial investment, providing a straightforward way to see your return. It also helps you gauge how this investment stacks up against others by comparing their ROI percentages, making it clearer which investments are yielding better returns.

Calculating Your Net Profit

Net profit, also known as the bottom line, is the definitive measure of your investment’s profitability after all expenses have been accounted for. This figure represents the actual earnings that contribute to your financial success and is crucial for a detailed understanding of the effectiveness of your investment strategy.

Here’s how to calculate net profit methodically:

1.    Aggregate All Revenue

Begin by summing up all forms of income generated from the investment. This includes not just the principal returns but also any ancillary earnings such as dividends, interest, or rental income, depending on the nature of the investment.

2.    Subtract All Expenses

Deduct all associated costs from the total revenue to ascertain the gross profit. These expenses encompass initial purchase costs, ongoing maintenance, operational fees, and any other expenditures incurred during the holding period of the investment.

3.    Account for Taxes

Taxes can significantly affect net earnings, so it’s important to factor in all tax liabilities related to the investment. This might include capital gains tax, property tax, or other relevant taxes depending on the investment type and jurisdiction.

By following these steps, investors can gain a clear and comprehensive view of what their investments truly yield after all financial obligations are met. Understanding net profit is more than just recognising revenue; it’s about measuring the real financial impact and sustainability of the investment, providing a basis for future financial planning and strategy optimisation.

Using a Return on Investment (ROI) Calculator

Using an ROI calculator simplifies the process of determining your return on investment. Instead of manually crunching numbers, you can enter figures into these digital tools and quickly get ROI results. This method is not only faster but also more accurate, making it ideal for evaluating different investments side by side. Whether you’re comparing several opportunities or checking the efficiency of one investment, an ROI calculator is a valuable resource for any investor.

A Partner in Financial Growth

At PSA Capital Investments, we go beyond traditional financial support. Our expertise in tailoring investment strategies ensures that you’re not just investing but optimising your financial portfolio. Our guidance is designed to make financial calculations straightforward, allowing you to focus more on making savvy investment choices.

We understand that each investor’s needs and goals are unique, which is why our services are crafted to offer more than just generic advice. We’re here to help you navigate your investment journey with confidence, providing clear, easy-to-understand insights and strategies that enhance your investment decisions.

Invest with Confidence with PSA

Ready to enhance your investment strategy with a clear understanding of your returns? Contact PSA Capital Investments on (03) 9847 7689 or express your interest in our mortgage products. Let us help you propel your investments to their full potential.

Author picture

PSA’s Director, Peter Marmara-Stewart, is a highly successful business owner and finance professional in Melbourne. As a certified Financial Planner with over 15 years of experience in business finance, accounting, and asset management, he provides clients with unparalleled expertise in asset protection, debt elimination and business restructuring. Call (03) 9847 7689 and see how Peter and the PSA team can help you get on the smarter path to financial returns.