What is Percentage Change?
Percentage Change is a mathematical concept that represents the degree of change over time. It is used extensively in finance to track the growth (or decline) of stocks, the increase in your salary, or the drop in corporate profits.
🎯 Financial Goal: To accurately measure performance and set realistic recovery expectations after a financial loss.
⚠️ Common Fear: “My stock dropped 50%, so it just needs to go up 50% for me to break even, right?” No! This is the most dangerous math trap in investing. If your ₹1,00,000 investment drops 50%, you have ₹50,000 left. If that ₹50,000 goes up 50%, you only have ₹75,000.
💡 The Decision: To recover from a 50% loss, you actually need a 100% gain just to break even. This is why preserving capital is often more mathematically important than chasing high returns.
The Formula
Percentage Change Formula
- If the result is positive, it is a Percentage Increase.
- If the result is negative, it is a Percentage Decrease.