# How to Calculate Net Returns

Higher net returns indicate better-performing investments.

Investors use net returns to calculate the return on their investments after all expenses and profits have been included. For example, stocks may have brokers fees associated with their purchase and sale as well as extra income such as dividends. The net return is measured as a percentage of the cost paid to obtain the asset. To calculate the net return, you need to know how much the asset cost, how much it was sold for and any other costs or income associated with the asset.

## Step 1

Calculate the total cost of your investment by adding what you paid for it to any fees you paid to acquire it. For example, if you paid \$1,500 for a stock and paid a \$10 broker's fee, your total cost would be \$1,510.

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## Step 2

Calculate the total return on your investment by adding the amount the asset was sold for and any payments, such as dividends, made to you while you owned it and subtracting the costs associated with the sale. For example, if you sold the stock for \$1,700, received \$50 in dividends while you owned it and paid a \$10 broker's fee to sell it, you would add \$1,700 to \$50 and subtract \$10 to get \$1,740.

## Step 3

Divide the total return by the total cost. In this example, you would divide \$1,740 by \$1,510 to get about 1.152.

## Step 4

Subtract 1 from the result from step 3 to find the net return expressed as a decimal. In this example, you would subtract 1 from 1.152 to get 0.152.