Educational material from 
What you will learn
- Separate external deposits and withdrawals from investment results.
- Show why the same price change can produce different gains in kronor.
- Explain why a general percentage-return calculation needs payment timing.
Begin with a list of events
Both accounts initially hold SEK 1,000 in the same fictional investment. The new deposit is also SEK 1,000. Account Early receives and invests the money immediately before the growth in value. Account Late receives it as cash immediately after that growth, when the measurement period ends. We leave fees, tax and dividends out.
The list must separate an external payment from what the investment itself produces. A deposit of your money is not an increase in value created by the holding. It also matters whether the money was invested during the whole price change or had no opportunity to be affected by it.
If the table does not fit, scroll it sideways.
| Event | Account Early | Account Late |
|---|---|---|
| Initial value | SEK 1,000 | SEK 1,000 |
| Deposit before price change | +SEK 1,000 | None |
| Value before price change | SEK 2,000 | SEK 1,000 |
| Value after +10% | SEK 2,200 | SEK 1,100 |
| Deposit after price change | None | +SEK 1,000 |
| Ending value | SEK 2,200 | SEK 2,100 |
Remove the deposit when explaining the gain in kronor
Account Early grew from SEK 1,000 to 2,200, but 1,000 came from outside. The investment gain is 2,200 − 1,000 − 1,000 = SEK 200. Account Late ends at 2,100: 2,100 − 1,000 − 1,000 = SEK 100. The deposit is the same, but different amounts were invested during the price change.
Calling Account Early’s whole increase of SEK 1,200 an investment gain would mix the deposit with the result. The deposited money remains in the ending value. The calculation above helps reconcile the gain in kronor; it does not automatically give a correct percentage return for payments at arbitrary times.
The price period’s base shows the same ten percent
During the price period itself, Account Early had SEK 2,000 invested: 200 ÷ 2,000 × 100 = 10%. Account Late had 1,000: 100 ÷ 1,000 × 100 = 10%. Its deposit happened after the period and should not be treated as money that was invested during the price change.
Dividing Account Early’s 200 by its very first value of 1,000 would give 20%. That uses the wrong base for the price period we have just defined. Write down the value immediately after a payment and before the next change when identifying which money participated.
More payments require more than two account values
In an account with several deposits and withdrawals, the return method must handle their times and amounts. CFA Institute distinguishes time-weighted measures, which remove the effect of external flows, from money-weighted measures, which are also affected by when money was invested. These measures answer different questions.
Our exercise avoids payments during the price period so that each base is visible. It does not describe a particular bank’s account report or Investiq’s internal return calculation. Shared deposit rules can simplify a stock-market-game comparison, but the ending value still needs to be read together with the conditions.
Try it yourself
A fictional holding starts at SEK 2,000 and becomes SEK 2,200 during the period. Afterwards SEK 500 is withdrawn, leaving an account value of SEK 1,700. Calculate the period’s gain in kronor and percent. The withdrawal happens after the entire change in value.
Show the solution and explanation
+SEK 200 and +10% during the price period.
Add back the external withdrawal when reconciling the money result: 1,700 − 2,000 + 500 = SEK 200. The period’s starting base was SEK 2,000, so 200 ÷ 2,000 × 100 = 10%. The lower ending account value comes from the withdrawal, rather than a price loss.
Check your understanding
Is a SEK 1,000 deposit a gain from the holding?
No. That money comes from outside. Keep the payment separate from the holding’s change in value.
Can two ending account observations alone show a correct return when payments occur between them?
No. You also need the payment amounts, their timing and a method that handles them.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
More lessons on this topic
Returns, inflation and company results
- Real return and inflation: calculate what your money can buy
- Fees and investment returns: account for the whole purchase and sale
- Annualized return and averages: calculate two different measures
- New shares and ownership dilution: calculate the change in your stake
- Revenue and profit: read a simple company result
Sources and examples
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
