How To Calculate Your Investments

How To Calculate Your Investments by Jerry Fetta

Investing at its root origin actually means “to clothe your capital”…like putting clothing on your money.

A simple and practical definition would be to put dollars out with the expectation and reasonable assurance that more dollars will return over a given period of time.

But how do we measure the performance of our investments?

There are a number of ways, but in this article I’m just going to share with you the ones that matter to me and I use personally!

First, we need to understand if what we are doing is actually “investing” .

You see there is investing and then there is speculating.

If I don’t know the difference, I better learn before I do anything at all.

There is also passive investing and active investing.

Personally, I am a passive investor, which means I do not invest my time into my investment deals. The purpose of investing for me is to incrementally buy my time back and so if an investment itself requires my time it does not serve its basic purpose.

The most important number for me is investment yield.

If I take the amount of annual profit I receive from an investment and divide that annual profit number by the amount of capital I invested, I will get a percentage. That percentage is called a yield.

For example, if I earn $10,000/yr in profit on a $100,000 initial investment, my yield is 10%.

I personally strive for 8–12% yields whenever I invest. If it’s lower than 8%, I’m not doing it.

It’s important to note, this is based on annual profit. Not annual gross income or revenue from the investment. For one, most investments have operating costs and management expenses so we don’t keep all of the gross income. We keep what’s left after those things are paid for and so we are going to calculate our yield based on what we actually keep.

The next most important is Compounding Annual Growth Rate.

This calculation helps me understand what my actual annual returns are when I include yield, increase in price or value, tax benefits and any other form of monetary return that I get from an investment.

CAGR is an abbreviation for this calculation. And this one isn’t easy math so to calculate this I use an investment calculator where I enter my initial investment and then my current value, plus the time horizon of the investment and it tells me my CAGR.

This is different than an average annual return. A compounding annual growth rate calculates the annual rate of growth an investment has when the profits are reinvested or compounded. If I’m not reinvesting my profits, this calculation is not really valid. Same goes for an investment that loses money. To truly compound, one cannot have losses otherwise the compounding is interrupted.

I also look at Return On Time Invested.

Like I said, I’m a passive investor. The point of investing is to free up my time and if an investment requires my time, for me it isn’t an investment. It’s a job.

My personal rule is that I don’t trade time for the same money twice. I already traded my time to earn the income. I’m not trading my time for it again when I invest.

Because of this, I actually track any involvement of my time. Return on Time Invested (RTI) is how I track this.

Here’s how this one works:

Take the annual yield in dollars (not the CAGR because we don’t actually realize any of the appreciation or other benefits in our incomes and often not until we sell or borrow against the investment).

Divide the annual yield in dollars by 12, so that you know how many dollars per month the investment pays you.

Now count up the amount of hours spent per month on the investment. And be extremely accurate!

Divide the annual yield in dollars by the amount of monthly hours and that is your hourly rate.

With our earlier example of earning $10,000/yr on a $100,000 investment.

That’s $833.33/mo that I earn.

Now let’s say I spent 2 hours per week on this investment. That comes out to 8.67 hours per calendar month.

$833.33 divided by 8.67 hours comes out to $96.12/hr. that I get paid to spend my time on this investment.

So the question becomes, what is an hour of my time worth? If I earn more than $96.12/hr at my job or in my business or on other investments then the RTI on this investment is poor and I should not do it. For me personally, an hour of my time is worth thousands of dollars in my companies and so anything that pays me less than that per hour is a poor RTI.

Lastly is something I call PITA Factor.

PITA Factor stands for Pain In The Ass Factor.

There isn’t a mathematical or objective measurement for this. This is 100% subjective.

How much of a hassle is this investment? Is it a pain in the ass to own or invest in?

Only a seasoned investor is really going to know how to gauge this one because a new investor or inexperienced investor is still in the Honeymoon Phase of investing and just excited to be here and be able to call themselves an investor.

A seasoned investor has invested for years and almost done it all. They know the numbers aren’t the only thing that tell the story with investments. If something has a high PITA Factor, it doesn’t matter how great the returns are. A high PITA Factor usually represents a poor RTI and also equates to high stress levels, frustration, and problems.

Some of the best help I ever got was early on from a mentor who taught me what a PITA Factor is and how to avoid it.

This is by no means every single way to measure investment performance, but it really is the bulk of what I use as an investor day to day. There are others that matter such as Taxable Equivalent Returns, etc. But we’ll save those for another time!

My hope is that this article helped you!

If you’re currently an investor I hope this showed you how to measure your performance and to also free up your time and attention with the RTI and PITA Factor.

If you’re a new investor or looking to get started I hope this gave you some guidance, and like it did for me, shows you how to avoid investments with a poor RTI and PITA Factor so that you can invest for a long time and free up your time more and more.

If you’re interested in learning about more ways to invest and what I do, I want to give you a free copy of my book How To Create Wealth!

This short little booklet will show you exactly what I did and how I invest.

It will also tell you what to avoid so that you can achieve greater financial freedom in your life.

Click here to claim your free copy.

To Purpose, Wealth & Freedom,

Jerry Fetta

Jerry Fetta is the CEO and Founder of Wealth DynamX. He is a nationally recognized financial expert featured in Forbes, Yahoo Finance, Fox, Chicago Weekly News, New York Finance, interviewed on over 45 podcasts with world renowned experts, earning endorsements and affiliations throughout his career with names like Kevin O’Leary, Grant Cardone, Dave Ramsey, and Pamela Yellen.

Jerry’s mission in life is to help create millions of financially educated and solvent families achieving greater financial freedom and sharing the truth about money with those around them.

Learn more at

(DISCLAIMER: The information in this content should not be considered tax, financial, investment, or any kind of professional advice. Only a professional diagnosis of your specific situation can determine which strategies are appropriate for your needs. Wealth DynamX can and does not provide advice unless/until engaged by you.)




Jerry Fetta is the CEO and Founder of Wealth DynamX. Jerry’s mission in life is to help create millions of financially educated and wealthy families.

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Jerry Fetta

Jerry Fetta

Jerry Fetta is the CEO and Founder of Wealth DynamX. Jerry’s mission in life is to help create millions of financially educated and wealthy families.

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