Core answer: Total stock return = (sale price − purchase price + dividends) ÷ purchase price. Bought 1,000 shares at ¥15, sold at ¥18, received ¥0.5/share dividend: (18 − 15 + 0.5) ÷ 15 = 23.3%. Annualize for comparison: (1.233)^(1/n) − 1. Include costs: commission ~0.025% (min ¥5), stamp tax 0.05% on sales, transfer fee 0.001% — round-trip friction ≈ 0.1–0.15%.
The complete return formula
Return % = (P₁ − P₀ + D − costs) ÷ P₀
- Price gain: P₁ − P₀
- Income: dividends D
- Costs: commissions, stamp tax (sell only), transfer fees
The cost stack (A-shares)
| Fee | Rate | Charged |
|---|---|---|
| Commission | ~0.025% (min ¥5) | buy + sell |
| Stamp tax | 0.05% | sell only (2023 cut) |
| Transfer fee | 0.001% | both |
| Margin interest | ~6–8%/yr | if leveraged |
The ¥5 minimum commission punishes tiny trades: a ¥1,000 trade pays 0.5% each way — 1% round trip before the stock moves.
Worked examples
Example 1 — Basic round trip. Buy 2,000 shares @ ¥12 = ¥24,000 (commission ¥6); sell @ ¥13.5 = ¥27,000 (commission ¥6.75 + stamp ¥13.5 + transfer ~¥0.5): net gain = 27,000 − 24,000 − 27 ≈ ¥2,973 → 12.4% on ¥24k in 5 months ≈ 32.5% annualized.
Example 2 — Averaging down. 1,000 @ ¥20, then 1,000 @ ¥15: cost basis ¥17.5. Break-even needs +16.7% from ¥15, not the original +33% — averaging down lowers basis but doubles exposure; it rescues good theses and deepens bad ones.
Example 3 — The recovery asymmetry. −20% needs +25% to recover; −50% needs +100%; −70% needs +233%. Position sizing exists to keep recoverable losses recoverable — a 5%-position blowup costs the portfolio ~3.5%, a 40%-position blowup is unrecoverable.
Example 4 — Dividend-adjusted. Price flat at ¥20 all year but paid ¥1 dividend: return = 5%, not 0%. Comparing stocks on price charts alone undercounts dividend payers systematically.
Common mistakes and myths
- Ignoring annualization — +12% in 3 months vs +15% in a year: the first is far better; compare like periods.
- Forgetting dividends in "flat" markets — the CSI 300 price index vs total-return index diverge ~2%/yr; over a decade that's a 22% gap.
- Cost-blind small trades — frequent small trades hand 1–3%/year to friction; the ¥5 minimum makes micro-lots the worst deal in the market.
- Averaging-down dogma — it works on index funds and quality companies; on dying companies it converts a loss into a catastrophe.
- Confusing realized with paper — unrealized gains are market's property until sold; plan exits with the same rigor as entries.