Takeaways
- Stock returns can increase your cash holdings and catalyze wealth.
- The average S&P 500 historical stock market return hovers around 8%.
- Stock sales are categorized as long or short-term capital gains.
- Investment losses can be yielded for tax-loss harvesting strategies.
- Lump sum investing or dollar-cost averaging are two commonly deployed investment strategies.
What Are Stocks?
Stocks are partial ownership rights in a company. Common stock is traded on large exchanges, including the Nasdaq and NYSE. Investors – ranging from retail investors to large institutional investors – trade publicly traded stocks daily. If you trade stocks, you can use our stock return calculator below to determine your gains or losses.
When you purchase stock, you become a shareholder in a company. Depending on the type of stock you are buying – common stock or preferred shares – you get voting rights for major shareholder decisions, preferential treatment for dividends, and have a say in determining executive compensation packages.
You can buy shares individually or in your online stock brokerage account. Alternatively, as part of your compensation package, you might earn the right to purchase shares with stock options or receive vested restricted stock units (RSUs).
Our Pick: Best Online Stock Brokerages
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Acorns Website
Acorns Investing App
Smart Money Rating: 5/5
Intro Offer: $20 Bonus Investment
Best For: Beginner Investors
Annual Fee: N/A
How to Use This Calculator
This stock return calculator will help you calculate your total profit or loss and investment return. To get the most accurate assessment, include the commissions you paid to execute the trade.
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Stock Return Calculator
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Great Job! You made a positive return on your investment. Keep it up!
Oh, no! You have a loss on your investment. Don't worry, you might be able to use this as part of a tax-loss harvesting strategy.
Note: Calculator does not include capital gains taxes or other ancillary fees
This investment calculator is for informational purposes only.
Stock Selling Considerations
Before you sell any stock, you should consider your whole investment philosophy. For example, are you a stock trader or a long-term investor? Here are several more considerations to take into account:
- Dividend Payments: Consider any dividends you received to get a more titrated idea of your investment returns over time. While not all stocks or industries pay dividends, they certainly increase your total return. Check out our list of 7 High Paying Dividend Stocks.
- Capital Gains Taxes: When you sell capital assets, you must consider capital gains treatment. If you sell an asset, like a stock, for a capital gain, you will be taxed at capital gain tax rates. Tax rates can range from 0%-20% for long-term capital gains and 10%-37% for short-term capital gains, which are taxed as ordinary income. Read about the 2024-2025 Capital Gains Tax Rates.
- Tax Strategies: Tax and investing professionals like implementing tax-loss harvesting, which uses investment losses to offset investment gains. Loss harvesting lowers your total capital gains for the year. The catch is that you have to sell your investments at a loss, which might not be the smartest money move.
- Inflation: When calculating what economics call “real” returns, you have to consider inflation and the purchasing power of money. Inflation can erode investment returns. For example, if you have a 10% return in two years and inflation was 2% during the same period, your real return is 8%.
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Dollar Cost Averaging vs. Lump Sum Investing
Depending on what you are investing in and your overarching investment philosophy, you should adopt dollar cost averaging or lump sum investing. Here’s the difference:
- Dollar-cost averaging is a capital deployment strategy for investing. With this strategy, you consistently purchase stocks over time, no matter the price. You don’t try to optimize for price; instead, optimize for consistency investing. For example, you could invest $500 from each paycheck into a Bitcoin ETF. Read more about Dollar-Cost Averaging.
- Lump sum investing is a philosophy of going “all in” when purchasing stocks. Here, you try to get the best price possible because you consider it a one-time purchase. For example, you might buy $1,000 of Nvidia’s stock (NDVA).
Related: What Are Dividend Aristocrats?
Individual Stock vs. Index Investing
You can invest in individual stocks or baskets of stocks called indexes, mutual funds, or both. Here are the differences:
- Individual Stocks: Financial experts tend to recommend that beginner investors invest in stocks of their favorite publicly traded companies or ones they use regularly. You can buy shares in individual companies you like or know well.
- Index Investing: If you don’t want to invest in a single company stock, you can invest in index funds. Index funds give you broad investment exposure and track a particular index, like the S&P 500. You can also invest in mutual funds or exchange-traded funds for diversified investing.
Related: What Is Investment Diversification?
Smart Summary
Our stock return calculator can simulate the investment gains or losses you might have. You might want to sell stocks to translate potential paper gains into tangible returns. Before pulling the trigger, consider how the gains fall within your broader investment portfolio. If you sell at a loss, you might be able to use these losses for tax loss harvesting. Investors focusing on the long term can increase their net worth over time.
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