Net return

What is net return

Net return is the total profit from an investment after deducting all costs, fees, and taxes. Unlike gross return, it shows the real amount the investor actually earns. This metric is essential for comparing different investment options because it reflects the true efficiency of an investment.

How net return is calculated

The calculation of net return includes:

• Gross return from the investment.
• Deduction of transaction fees (e.g., broker and exchange fees).
• Deduction of taxes on capital gains, dividends, or interest.
• Other costs related to the investment (management fees, account maintenance fees, etc.).

Why net return matters

• Gives a more accurate picture of the investment's true performance.
• Allows fair comparisons between investments with different cost profiles.
• Helps optimize asset allocation and investment strategy.

Factors affecting net return

• The tax environment in the investor's country.
• The level of trading and management fees.
• The holding period of the investment and related costs.
• Currency movements in the case of foreign investments.

Net return on Stonkee

On Stonkee you can track both gross and net return for each position. The AI tools can factor in fees, tax burdens, and other costs so the investor sees the true performance of the portfolio.

Summary

Net return is a key metric for evaluating the actual appreciation of an investment. Without tracking it, investors risk overestimating portfolio performance by overlooking costs and taxes.