When you're reviewing your investments, it's important to remember that income and returns come from two main sources, Capital Gains and Interim Income.
In terms of your investments, it's important to note when reviewing them, that income and returns come from two sources; Interim Income and Capital Gains
Capital Gain (or Loss)
The Capital Gain (or Loss) represents the difference in the value of the investments from the time of purchase until now (or the date of selling). It is calculated using the following:
((Current or sale price per unit - purchase price) * number of units) - fees and taxes
For example, let's assume that you purchased 100 shares of Amazing Blue Widget Co. for $50 each and then sold them for $80 each. You had to pay $10 to buy, $10 to sell and 15% tax on the profit, this would work out to: (($80 - $50)*100) - $20 - $450 = $2,430 or a return of 48.6% on your original $5,000 investment.
Interim Income
The Interim Income is the total amount received in interim payments (dividends, interest etc.) over the life of your investment. It is calculated using the following:
(Interim % * value of investment) - taxes
This would need to be done and calculated for each interim payment received.
For example, let's assume that you've held 100 ABWC shares for three years, and that they paid dividends of 3% a year; in the first year the shares were $50 each, in the second, $60 each and in the third $80 each. Your return would be: 3% of $5,000, $6,000 and $8,000 less tax; this works out to: $485.
Your total return
The total return you receive is that of your capital gain (or loss) added to your interim income. From this, you can compare to the original price of the investment when you purchased it and then see what percentage gain or loss has been made on it.
For example, your purchase price of ABWC shares was $5,000; over three years, you've made $2,430 in capital gains and $485 in interim returns (dividends) for a total of $2,915. That's an increase of 58.3% over three years, or 19.4% a year - Not bad!
The total return you receive should then be compared against your initial targets and overall life goals. Therefore, it can aid you in deciding whether it is more beneficial to keep your investments or sell them instead.