You invest money to make it grow, so it is important you evaluate the effectiveness of your investments once in a while. Evaluating an investment is as simple as calculating the return you are earning on it--a number called the return on investment (ROI). It is important to know you actually have not earned anything on your investment until you have realized those earnings. Realized earnings are earnings withdrawn from the investment. For example, if you invested $1,000 and it increased to $1,100, your ROI is $100 dollars, but it is not realized until you take it out of the stock market. Calculating your realized return can be done using a simple formula.
Write this equation:
Realized Return = Realized Gain/Cost of investment x 100
This is what you will use to calculate your realized return as a percentage of your total investment.
Analyze your investment. Write down its initial cost--how much money you invested in the first place--and its realized return--how much money you have withdrawn from the investment WITHOUT having dipped into its initial value.
Plug the numbers into the formula and calculate your answer. For example, if you had invested $1,000 dollars, then realized a gain of $100 when the total investment had increased to $1,100, the formula would look like this:
Realized Return = $100/$1000 x 100 = 10 percent.
In this case, you would have earned a 10 percent realized return.