What numbers to look for investment returns
"(Value of shares+Dividends received)/(Initial investment) would be the typical formula though this is more of a percentage where 1 would indicate that you broke even, assuming no inflation to be factored. No, you don't have to estimate the share price based on revenues as I would question how well did anyone estimate what kind of revenues Facebook, Apple, or Google have had and will have. To estimate the value of shares, I'd likely consider what does my investment strategy use as metrics: Is it discounted cash flow, is it based on earnings, is it something else? There are many ways to determine what a stock ""should be worth"" that depending on what you want to believe there are more than a few ways one could go."
"Do mutual funds edit/censor underperforming investments to make their   returns look better, and if so, is there any way one can figure out if   they are doing it? No, that's not what the quote says. What the quote says is that the funds routinely drop investments that do not bring the expected return, which is true. That's their job, that is what is called ""active management"". Obviously, if you're measuring the fund by their success/failure to beat the market, to beat the market the funds must consistently select over-performers. No-one claims that they only select over-performers, but they select enough of them (or not...) for the average returns to be appealing (or not...) for the investors." The general concept is that your money will grow at an accelerating rate because you start getting interest paid on your returns in addition to the original investment.  As a simple example, assume you invest $100 and get 10% interest per year paid annually.   -At the end of the first year you have your $100 + $10 interest for a total of $110. -So you start the second year with $110 and so 10% would be $11 for a total of $121. -The third year you start with $121 so 10% would be $12.10 for a total of $133.10 See how the amount it goes up each year increases? If we were talking a higher initial amount or a larger number of years that can really add up. That is essence is compound interest. Most of the complicated looking formulas you see out there for compound interest are just shortcuts so you don't have to iteratively go through the above exercise a bunch of times to find out how much you would have after some number of years. This formula tells you how much you would have(A) after a certain number of years(t)  at a given interest rate(r) assuming they pay interest n times per year, for example you would use 12 for n if it paid interest monthly instead of yearly. P represents the  amount you started out with.   If you keep investing monthly (as shown in your example) instead of just depositing it and letting it sit, you have to use a more complicated formula. Finance people refer to this as calculating the future value of an annuity.  That formula looks like this: A = PMT [((1 + r)N - 1) / r] x (1+r)  A : Is the amount you would have at the end of the time period.   N : The number of compounding periods (months if you get interest calculated monthly)   PMT : The total amount you are putting in each period (N)    r: Just like before, the interest rate you are getting paid. Be sure to adjust this to a monthly number if N represents months (divide APR by 12)* *Most interest rates are quoted as APR, which is the annualized interest rate not counting compounding. Don't confuse this with APY, which has compounding built into it and is not appropriate for use in this formula. Inserting your example: r (monthly interest rate) = 15% APR / 12 = .0125 n = 30 years * 12 months/year = 360 months   A = $150 x [((1 + .0125)360 - 1) / .0125] x (1+.0125) A = $1,051,473.09 (rounded) Never trust a single source to give you a fair price, especially if they are not in competition, moreso if they know that's the case.  I would want to get a quote from at least one other broker in terms of what they feel they can sell the bonds for.  (and let them know they are not the only one you are getting a quote from)  To start with you need information, such as when is the last time a bond like the ones you have traded and what did it sell for. Also sources for where you can sell the bonds and more info on the entire subject. SIFMA (The Securities Industry and Financial Markets Association) has a pretty helpful website called InvestingInBonds.com.  I find it has a wealth of information, and is relatively free of bias. On the Municipal Markets at a Glance page you can get history for various bonds if you have the CUSIP (pronounced 'que-sip') numbers for the bonds. If these bonds are as good as the advisor is telling you they are, then they should be selling for a premium, and the recent sales history would reflect that.  I'd find one or two other potential sellers, and get prices from each of them, compare that against recent history and go with whichever one seems to be offering you the best deal. In terms of choosing someone, and how to go about selling bonds, the same website has some excellent information and guidance on buying and selling bonds and How to Choose an Investment Professional which includes how to check up on them to see if they have ever faced disciplinary action, etc..  I would also consider any gains you might have to declare if you sell these for more than face value, and if that would be taxable etc. I would also question your 'too safe' judgement.  Just because something is 'safe' I would not necessarily throw it out.  You need to look at the return relative to the risk, and if you are not investing in a tax sheltered account, the affect of taxes on your net return.  If these are earning a really good return, for fairly low risk, they might be worth keeping, especially if in today's market you need to take substantially more risk to get a comparable return.  Taking more risk to get nearly the same return isn't very wise, since an aspect of the risk is perhaps not getting any return, or losing money.   In a volatile market there can be a substantial benefit to having a lower risk 'foundation' that you build upon with more risky investments, in order to provide some risk diversity in your portfolio. You might want to consider for example how these bonds have done over the last 13 years, compared to a similar investment in the type of 'less safe' vehicles you are considering.  Perhaps you'd be better off just holding these to maturity instead of gambling on something with a lot more risk that could go south on you. The common opinion is an oversimplification at best. The problem with buying a house using cash is that it may leave you cash-poor, forcing you to take out a home equity loan at some point... which may be at a higher rate than the mortgage would have been. On the other hand, knowing that you have no obligation to a lender is quite nice, and many folks prefer eliminating that source of stress. IF you can get a mortgage at a sufficiently low rate, using it to leverage an investment is not a bad strategy. Average historical return on the stock market is around 8%, so any mortgage rate lower than that is a relatively good bet and a rate MUCH lower (as now) is that much better a bet. There is, of course, some risk involved and the obligation to make mortgage payments, and your actual return is reduced by what you're paying on the mortage... but it's still a pretty good deal. As far as investment vehicles: The same answers apply as always. You want a rate of return higher than what you're paying on the mortgage, preferably market rate of return or better. CDs won't do it, as you've found. You're going to have to increase the risk to increase the return. That does mean picking and maintaining a diversified balance of investments and investment types. Working with index funds makes diversifying within a type easy, but you're probably going to want both stocks and bonds, rebalancing between them when they drift too far from your desired mix.  My own investments are a specific mix with one each of bond fund, large cap fund, small cap fund, REIT, and international fund. Bonds are the biggest part of that, since they're lowest risk, but the others play a greater part in producing returns on the investments. The exact mix that would be optimal for you depends on your risk tolerance (I'm classified as a moderately aggressive investor), the time horizon you're looking at before you may be forced to pull money back out of the investments, and some matters of personal taste. I've been averaging about 10%, but I had the luxury of being able to ride out the depression and indeed invest during it. Against that, my mortgage is under 4% interest rate, and is for less than 80% of the purchase price so I didn't need to pay the surcharge for mortgage insurance. In fact, I borrowed only half the cost of the house and paid the rest in cash, specifically because leveraging does involve some risk and this was the level of risk I was comfortable with. I also set the duration of the loan so it will be paid off at about the same time I expect to retire. Again, that's very much a personal judgement. If you need specific advice, it's worth finding a financial counselor and having them help you run the numbers. Do NOT go with someone associated with an investment house; they're going to be biased toward whatever produces the most income for them. Select someone who is strictly an advisor; they may cost you a bit more but they're more likely to give you useful advice. Don't take my word for any of this. I know enough to know how little I know. But hopefully I've given you some insight into what the issues are and what questions you need to ask, and answer, before making your decisions. You should use the Gordon Growth model, but you are using the wrong rate.  required return = rf + market premium x Beta  rm = 0,12, premium = 0,08 --&gt; rf = 0,04 thus rr = 0.04 + 0.08 * 1.5 = 0.16  then you get $15/(0.16-0.05) = $136,36 All you have to do is ask Warren Buffet that question and you'll have your answer! (grin)  He is the very definition of someone who relies on the fundamentals as a major part of his investment decisions. Investors who rely on analysis of fundamentals tend to be more long-term strategic planners than most other investors, who seem more focused on momentum-based thinking. There are some industries which have historically low P/E ratios, such as utilities, but I don't think that implies poor growth prospects.  How often does a utility go out of business?   I think oftentimes if you really look into the numbers, there are companies reporting higher earnings and earnings growth, but is that top-line growth, or is it the result of cost-cutting and other measures which artificially imply a healthy and growing company?  A healthy company is one which shows year-over-year organic growth in revenues and earnings from sales, not one which has to continually make new acquisitions or use accounting tricks to dress up the bottom line. Is it possible to do well by investing in companies with solid fundamentals?  Absolutely.  You may not realize the same rate of short-term returns as others who use momentum-based trading strategies, but over the long haul I'm willing to bet you'll see a better overall average return than they do. such analysis helps you keep track of the percentage of income that you invest You could apply 1:1:1 ratio. i.e spend 1/3, save 1/3 and invest 1/3. Hope that helps The total number of shares on April 1st is 100 + 180 + 275 = 555.  The price on April 1st is required.  The current price is stated as $2, but $2 * 555 = $1110 and the current fund values is stated as $1500.  Opting to take the current value as $1500, the price on April 1st can be calculated as $1500/555 = $2.7027. The amounts invested as number of shares x share price are: (Note these investment amounts do not match the example scenario's investment amounts, presumably because the example numbers are just made up.) The monthly returns can be calculated: The current values for each investor as invested amount x returns are: Checking the total: