Follow the Simple Math
How to calculate the % return necessary to recoup your lost principal.
Example:
$10,000.00
– $3000.00
$7,000.00
Divide the loss, $3,0000 by the remaining principal ($7,000) = .4286%, rounded off to 43%.
A 43% Gain necessary to recapture the principal of a 30% loss.
(So to check the math, multiply $7,000 x .4286% =$3,000.20)
Another example:
Say you lost 20%…..
$10,000.00
– $2,000.00
$8,000.00
Divide the loss, $2,000 by the remaining principal ($8,000) = .25%
A 25% gain is necessary to recoup a 20% loss of principal.
(And again, multiply the $8,000 x .25% = $2000.00!)
Remember: 1. It will always take more time AND more gain to offset a loss.
2. You may afford the loss, but can you afford the time to recoup the principal?