how do i know when my computer is losing efficiency and how do i fix it

How do you know? That question seems moderately absurd. You know it by noticing/perceiving it. How else would you? Either you notice your computer seems slower, or else you see lower scores in benchmark tests you run, whatever...

How you fix it is a bit more involved. It depends on what the problem is. If it's standard software issues, you can run cleaners to remove clutter, clean the registry, free up drive space, and so on. If it's data fragmentation on a hard drive, you defragment. Maybe run a checkdisk to see if there are any other drive issues slowing things down. Alternatively, you can just wipe your drives and start from a fresh install.
However... If the cause of the slowdown is hardware wear and tear, then basically you can only replace the parts that are worn to the point they are losing performance...

a computer's performance can't drop.

the number of services, and data-rubbish, that piles up over time can increase the load on your computer, though.

here are some tips, that might help you clean out your computer:

• keep your system-partition's usage below 70%
• browse your installed programs and remove everything you don't really need anymore
• (internet only) regularly empty your web-browser's cache and remove cookies as well as cleaning out everything else, like saved passwords, remove/disable some plugins you don't need (note: make sure, that you still have the passwords in your head or noted elsewhere)
• clean your startup/boot out from unnecessary services and tools (you would be surprised what an amount of useless services are installed alongside other programs that always start up with your OS)
• remove unnecessary registry entries (note: backup your registry before!!)
• deactivate unnecessary OS tools (for example: windows' IE, in case you're using another browser)
• keep your OS, drivers and most used applications up-to-date
• remove your OS' auto-backup files, except the most recent one
• with air-out-of-a-can, carefully remove dust out of your computer (some hardware is throttling on a specific heat limit)

lastly, i can recommend the program "Ccleaner".
that little GUI helps you out in most of the above cleaning tasks, like editing your startup, cleaning the registry, etc.

if you wanna know, if your computer is slower than usual, try the program "Gamebooster".
if it actually increases your performance, than you either have a 90's PC or you should clean out ALOT of stuff.

Watch behind and below the case. It may have a performance leak. Nasty stuff when that happens

Glary Utilities.