Monday, May 16, 2011

There's a lot of confusion over ROI in Empire Avenue. ROI is calculated by:



ROI = (total investment return-cost)/cost



The return on investment is total dividends plus the gains you have when you sell a stock. Therefore ROI CAN NOT be calculated for a single day. What people actually mean when they say "ROI" in Empire Avenue is "daily capitalization rate".



A cap rate is simply the income divided by price. It's typically done on an annual basis but it can be done for any time period.



The problem with using a daily cap rate is it doesn't give an accurate overview of the investment. Some people have slow days but make up for it. I recommending using a 7-10 day average. Look at the dividend history for the individual. Compare the dividends to the current day and cap rate. If they are the same you know to expect this return on average. If they are lower or higher you know this is a good or bad day for the individual. http://psxs.us/mT3JCw

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