A return is the amount of money earned or lost on an investment. Annual returns are usually shown as a percentage on your statements.
For example, if you start the year with $100, and at the end of the year, you have $110; that would mean you have a 10% return on your money.
On Wealthsimple Trade, we calculate your return using simple returns.
A simple return is a basic calculation of your net earnings divided by your net deposits. It is the easiest calculation to understand. This calculation takes all of your deposits and assumes they were added to your account on the first day the account was funded.
Note: In a case where you've earned positive returns, and then withdrawn more money than you deposited, a simple return won't accurately reflect what's going on.
The basic calculation for simple returns:
[[Total account value (current market value of securities + cash) less net deposits] / net deposits] x 100
Dividends on Wealthsimple Trade are paid in cash. Because of this, they are reflected in the earnings for your total account, but not reflected in the individual return for the security.
As an example, if you have $100 invested in stock XYZ and receive a dividend of $1.00, your total account value would now be $101.00 and you would have 1% returns in your account.