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Rate of return - ee & er contributions
Old 08-15-2012, 07:27 PM   #1
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Rate of return - ee & er contributions

Getting a pile of documents ready to go interview a financial planner, and I'd like to do calculations on my 401(k) rate of return.

It's easy for DH, he retired 4 years ago, so there's no more employee contributions or employer match. I'll just trust whatever Fidelity says it was from the last statement.

However, I'm still working, chucking as much as I can in mine, and also getting that employer match while they're in the mood to give it.

Is there a nifty formula to calculate your rate of return without those contributions, or should I include the employer match & just leave mine out?

Consider me corn-fused, and not just about dryer sheets.....

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Old 08-15-2012, 07:46 PM   #2
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An easy formula that usually comes pretty close to the return is:

[end of year value /(beginning of year value + 1/2 of contributions for the year)]-1

This formula assumes that contributions occur consistently over the year.

Whether you include employer match or not is your decision but it will obviously goose your return.

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Old 08-16-2012, 11:52 AM   #3
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If your contributions aren't uniform, or you want a more exact number, the XIRR function in Excel should do you nicely. Google should give you some templates for it and you can just plug in your own numbers.
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