What Is Percentage Gain In IPO and Its Process | My Espresso

# What is Percentage Gain?

The percentage gain is a crucial and fundamental metric used to determine the overall performance of any investment. The fact that your invested money may vary means that comparing your ROI (Return on Investment) may not be an ideal choice. Thus, when it comes to investment evaluation, percentage gains are widely accepted.

Published on 03 March 2023

Data and insights on percentage returns from multiple investments, such as the percentage gain in an IPO, can assist you in making better future investment and financial decisions by evaluating and determining which asset is advantageous to you and by how much.

Moreover, analyzing your percentage gains via multiple investments will help you comprehend the returns to be anticipated beforehand. If you’re an investor, you should definitely add percentage gains to your investing toolbox.

The percentage gain calculation process is indeed simple. You can perform it using a simple calculator without any hassle. In this article, you’ll get a detailed insight into what a percentage gain is, the gain percent formula, and more. So, read till the end.

## Percentage Gain Meaning

When it comes to selling and buying volumes, their difference is known as gain or profit. Here, percentage gain is a term that implies the profit you incur after the sale of an asset as a percent gain of the buying volume.

If you spend INR 40 lakhs to buy a plot of land and then sell it for INR 65 lakhs, you will profit INR 25 lakhs. Here, you make a percentage gain of 50%, which is half your purchase volume.

## Things To Consider When Performing Percentage Gain Calculation

Apart from the return and the invested capital, some other factors may influence the percentage gain. Although they can occur a bit at first, they establish a distinction and should be included in the formula of gain percent. For example, the investor receives or receives dividends while paying brokerage fees.

### 1.  Dividends

Dividends are the funds that a company pays to its shareholders in exchange for them holding its stock. The company’s board decides the dividend percentage, which typically ranges between 2% and 5% of the stock value. Dividends are generally dispersed on a per-share basis.

If you buy a stock worth INR 100 and later sell it for INR 130, you’ll make a profit of INR 30 or get a 30% return on your investment. Moreover, if the firm announces a 5% dividend payout on their stock, you must consider it in the gain percent formula. Consequently, the estimate will be somewhat like this:

ROI = Selling Price (INR 130) - Capital Investment (INR 100) + Dividend (INR 5) divided by 100

ROI = 35/100 = (35/100 x 100)% = 35%

ROI (percentage gain) = 35%

### 2.  Brokerage Fees

When investing in bonds, stocks, or other assets, you'll need to work with a reputable and licensed stockbroker. Furthermore, whether you're buying or selling, you'll have to pay a brokerage fee for each transaction.

Typically, the brokerage fees range between 0.25% and 0.75% of the entire trading volume. Nevertheless, some brokers charge a flat brokerage fee, no matter how high or low your trading volume is. Going back to the previously used analogy, let’s say you paid INR 2 as your brokerage fees.

It will influence the gain percent formula, and the equation will look like this:

Percentage Gain = Selling Price (INR 130) - Capital Investment (INR 100) - Brokerage Fees (INR 2) divided by 100

Percentage Gain = 28%

### 3.  Capital Gain Tax

You may have to pay capital gains when you sell an asset, depending on the time for which you have owned or held possession of that asset.

• You may end up paying a short-term capital gain tax higher than the capital gain tax for the long term if you sell the asset within a year of buying it.
• You will get exempted from paying short-term capital gain tax if you sell the asset after retaining it for more than a year from buying it. In such cases, you’ll have to pay long-term capital gain tax, which is a lower percentage.

## Percentage Gain Calculation

The percentage gain calculation for your investment is simple and easy to perform in an arithmetic operation. Nevertheless, you must determine the gain or profit before calculating the percentage gain. The formula for determining the gain or profit is:

 Selling Price – Buying Price = Gain

Let’s better understand this with the help of an example.

Consider that you’re purchasing stock worth \$700 at the start of January. Once six months go by and the market performs well, you’ve chosen to sell the stock at the current market price of \$900. In that case, you’ll make a profit on that investment.

Selling Price – Buying Price = Gain

\$900 – \$700 = Gain

Gain = \$200

The gain percent formula is the difference between the selling and buying prices (gain) expressed in the form of a percentage concerning the buying price. Arithmetically, you can express the gain percent formula as:

To continue with the example, here’s what you need to know:

Percentage Gain = (\$200 / \$700) x 100

Percentage Gain = 28.57%

Percentage gain assists investors in measuring how much profit they can get from a stock investment. Add this calculation trading tool to your toolbox today!

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