Sunday, 15 May 2011

Which is a more realistic way of calculating portfolio return?

 Came out with some hypothetical numbers to calculate investment return.

Should I just include cash from earned income + investment gain as part of calculation? 
Or should I only include investment gain to calculate?
Or simply just calculate how much is your absolute profits? which in the example above is 63400-60000=3400


Createwealth8888 said...

1. It is nicer to seperate the measuring and tracking function of your investment.

2. Use IXRR to measure your Returns of your capital which includes injection of more capital from times to times.

3. Track your current value of your portfolio up to the last market closing and link this value back to XIRR to measure your Returns. You track your buy , sell, dividends, cash balance, and holding, etc.

OT83 said...

Hi Uncle,

Thanks for the advice.

Now I have one main problem, I do not know the starting value of my portfolio as over the years I keep on injecting fresh funds into my funds. Hence it is tough for me to have a start balance value for XIRR calculation. Any advise?


Createwealth8888 said...

To measure your Returns on your Investing Capital, you don't need to know your starting value of your portfolio.

You just need to know your date and amount of capital injected e.g.

Date Capital Injected
1-Jan-10 -$20,000

6-Jul-10 -$10,000

2-Feb-11 -$20,000

12-May-11 -$10,000

13-May-11 $105,000 (Last item in your XIRR columns is the your current portfolio value at Friday market closing. Current portfolio value = Total Value of all your stocks holding at Friday market closing+ all your remaining cash in the portfolio for investing)

XIRR the above columns = XX%. You may send me your sample worksheet

Createwealth8888 said...

Have you settled your XIRR?

OT83 said...

yup. I had settled.

Thanks uncle cw for advise

Singapore Man Of Leisure said...

Hello OT,

I see you are learning a lot from CW8888 - just like I did - discovering this XIRR from his blog was the best thing since sliced bread to me!

By the way, just sharing that I use "insert comment" in the excel file tracking my buys and sells. I write all the reasons I buy or sell.

Overtime, it helps me understand myself better. It also helped me to understand CW8888 when he wrote: Less analysing; more investing.

OT83 said...


I still don't understand the part on less analysing, more investing.

Maybe it takes time for me to understand

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