2015 YTD investment performance thread

[utrecht]

OK, I'm finally getting back to this. I want to get an overall ballpark estimate of our YTD growth - don't have time to track monthly investments from 401k and enter it into an IRR spreadsheet. So, I tried to use the formula above: ($start-$now-$addedSinceStart)/$start

When I put my numbers in, I am getting a negative return, which doesn't make sense to me since the account has grown more than what we have invested (total invested this year so far is $37,951 and the overall balance has grown by $64,703, so our net growth for the year is $14,752). So the return should be a positive number. Shouldn't the formula be: ($now - $start - $addedSinceStart)/$start

($Now-$start-$addedsincestart)/$start is more correct than the first formula but its still not correct. If you have a large balance and small contributions it will be close-ish....but the larger your contributions are compared to your initial balance, the farther away from correct this formula will be.

 

[simple girl]

($Now-$start-$addedsincestart)/$start is more correct than the first formula but its still not correct. If you have a large balance and small contributions it will be close-ish....but the larger your contributions are compared to your initial balance, the farther away from correct this formula will be.

We have a large balance (to me, it's large, maybe not to the multimillionaires here, lol) - so, I'll call it close enough! Thanks so much.

So, looks like our YTD is ~ 2.31%.

 

[pb4uski]

How about ($now - $start - $added)/ ($start - $added)?

For example, if $start =100, $added =20 and $now = 130 then the gain of 10 divided by the average invested balance of 110 is 9%

 

[steelyman]

I'll be lagging many of you when all is said and done and 2015 is in the books, but that's OK.

I think threads like this are very good in providing a survey of sorts where people provide an honest effort at accurately reporting investment performance numbers in a way that is comparable over a reasonable length of time. Here's hoping to see another of these threads in the New Year!

 

[simple girl]

How about ($now - $start - $added)/ ($start - $added)?

For example, if $start =100, $added =20 and $now = 130 then the gain of 10 divided by the average invested balance of 110 is 9%

I have no clue...is that more accurate?

Will let others give their two cents.

 

[utrecht]

How about ($now - $start - $added)/ ($start - $added)?

For example, if $start =100, $added =20 and $now = 130 then the gain of 10 divided by the average invested balance of 110 is 9%

This may or may not be more correct depending on how large the initial balance is compared to the size of the contributions and when the contributions were made.

If we are talking about something like a $300,000 balance and contributions of $500 per month added monthly and not all at once towards the end of the year, then this formula probably is more correct. Either way, if you are doing it this way, I wouldnt say you have a return of 2.31%. Its no where near accurate enough. I would just call it 2.3% and even that is probably overdoing the accuracy level.

 

[audreyh1]

Quicken calculates ROI as ($now+$removed)/($start+$added)

I think that's a pretty good way to do it, and close enough for back-of-the-envelope anyway. How precise does one have to be?

 

[NW-Bound]

Quicken calculates ROI as ($now+$removed)/($start+$added)

I think that's a pretty good way to do it, and close enough for back-of-the-envelope anyway. How precise does one have to be?

That's plenty good. Nowadays, there's no "added" for me and "removed" is only a few percent, so the above is all I need. No stinkin' IRR needed.

 

[utrecht]

Lets say I started with $500,000 and withdrew $50,000 on Jan 1st.
At the end of the year, I have $500,000 but I added $25,000 on July 1st after selling a house.

My actual return according to XIRR is +5.42%

Can you post the return according to Quicken? The formula you posted doesnt make sense to me. It cant be correct. $550,000/$525,000? I get 1.047. Is that a 4.7% return? If so, its not all that close to correct.

 

[NW-Bound]

That's a 10% WR right at the beginning of the period!

Yes, you need IRR method in this case.

 

[simple girl]

$Now-$start-$addedsincestart)/$start = 2.3%

($now - $start - $added)/ ($start - $added) = 1.3%


($now+$removed)/($start+$added) = 2.2%


Well, at least it is positive no matter what calculation I use.


OK, back to work prep...not retired fully yet folks.

 

[NW-Bound]

That middle formula that gave you 1.3% does not make sense. The other 2 agree as well as one could expect.

 

[audreyh1]

Lets say I started with $500,000 and withdrew $50,000 on Jan 1st.
At the end of the year, I have $500,000 but I added $25,000 on July 1st after selling a house.

My actual return according to XIRR is +5.42%

Can you post the return according to Quicken? The formula you posted doesnt make sense to me. It cant be correct. $550,000/$525,000? I get 1.047. Is that a 4.7% return? If so, its not all that close to correct.

That looks right - 4.76% or 4.8% return if rounded.

I can't actually enter that in Quicken - Quicken does the computation based funds and accounts in the software - you don't enter anything other than select the funds or the accounts and the start and end dates.

That formula acts as if additions were made at the beginning of the year. But IMO - it's still close enough if you don't want to go through the process of entering a series of values and dates throughout a given period of time.

 

[Mulligan]

I'll be lagging many of you when all is said and done and 2015 is in the books, but that's OK.

I think threads like this are very good in providing a survey of sorts where people provide an honest effort at accurately reporting investment performance numbers in a way that is comparable over a reasonable length of time. Here's hoping to see another of these threads in the New Year!

Thanks to my small amount of mutual funds recovering, I am up about 9%. But this in itself almost will necessitate my returns will be low next year due to the fact most of my money is in preferred stocks. People have overpaid on some and they are too far over par and that will reverse course. But that is fine with me as I reinvest all my income and my effective yield will go up through buying at lower prices.


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[audreyh1]

That's plenty good. Nowadays, there's no "added" for me and "removed" is only a few percent, so the above is all I need. No stinkin' IRR needed.

If I'm doing the ROI computation on a given fund, added would be any rebalancing into that fund during the year, and removed would be any distributions on reinvested in the fund.

And that is as close as I try to get - the Quicken reports. I'm sometimes comparing performance across asset classes or specific funds, so using the same method and seeing relative performance.

But I also use it for my portfolio ROI year-to-date computation, and like you I don't have any additions during the year.

 

[utrecht]

Right - 4.7% or 4.8% return if rounded.

I can't actually enter that in Quicken - Quicken does the computation based funds and accounts in the software - you don't enter anything other than select the funds or the accounts and the start and end dates.

That formula acts as if additions were made at the beginning of the year. But IMO - it's still close enough if you don't want to go through the process of entering a series of values and dates throughout a given period of time.

I dont see how 5.4% and 4.8% are close enough, especially among a group of people who nit pick tiny percentage points in expense ratios and other things. Lots of people withdraw at the beginning of the year like my example shows but very few people make a large contribution on the first day of the year. Most people contribute periodically during the year or a one time lump sum from the sale of a house or an inheritance but that will rarely coincide with the first day of the year.

People can figure their return however they like, but when they post returns in a thread with a bunch of other people I assume its to compare to see what other people have accomplished and if some peoples return is just a wild approximation that could easily be 15% or more off, it doesnt mean much.

 

[audreyh1]

The only way to do that is to require everyone to use the exact same formula.

What I see here is people using their own methods, or what their brokerage reports, and some include the start of year withdrawal in their calculations, and others don't. People generally state how they arrived at their calculation. And there is a wide variation and wide results.

 

[Texas Proud]

Just throwing this out since someone mentioned bond fund distributions and not putting growth in daily....

You should not put in interest daily... a bond fund keeps an income account separate from the principal account... at the end of the month they calculate how much of that income account is yours and sends it to you as a dividend.... you have the option of having them invest that dividend back into the principal account...

The price changes you see posted are the gains or losses that the bonds themselves experience, not any accrual of interest received...

 

[utrecht]

The only way to do that is to require everyone to use the exact same formula.

What I see here is people using their own methods, or what their brokerage reports, and some include the start of year withdrawal in their calculations, and others don't. People generally state how they arrived at their calculation. And there is a wide variation and wide results.

Like I said, people can post whatever results they want, but they should at least know if their results are accurate or not. Otherwise they could be WAY off when they make certain projections for their future portfolio.

If I get 4.8% every year for 20 years but thought I was getting 5.4% every year and planned for 5.4%, the final result is going to be drastically different.

 

[Hermit]

Quicken says IRR = 1.76% for year. No additions. One withdrawal of about 1.6% a couple of weeks ago.

This reminds me - I need to re-balance after that annual withdrawal.

 

[NW-Bound]

I am flat YTD. That's not too good compared to the S&P which is up 4%, but then I have other sectors that are beaten down, such as emerging markets that are down bad. Even total international stocks are down because of the strong dollar.

Should I bother to nitpick how other people compute their returns? No. We do not have a contest here.

And then, let alone a fraction of a percent, even 1% or 2% can be wiped out in this volatile market. Many of my stock holdings move more than 5% each day.

To borrow from a Bob Dylan song:

And don’t speak too soon
For the wheel’s still in spin
And there’s no tellin’ who that it’s namin’
For the loser now will be later to win
For the times they are a-changin’​

 

[audreyh1]

Just throwing this out since someone mentioned bond fund distributions and not putting growth in daily....

You should not put in interest daily... a bond fund keeps an income account separate from the principal account... at the end of the month they calculate how much of that income account is yours and sends it to you as a dividend.... you have the option of having them invest that dividend back into the principal account...

The price changes you see posted are the gains or losses that the bonds themselves experience, not any accrual of interest received...

That's right. Although there are some exceptions. DODIX is one. The NAV is a sawtooth that drops every three months - a good clue that a bond fund is using the equity MF method.

 

[braumeister]

Tax-advantaged accounts, which are ⅔ of our total portfolio, have had no inputs or withdrawals. Comparing present balance with start of the year, up right about 2%.

Too much action this year (buying/selling house, etc.) to include the taxable accounts. Simple is good.

 

[Andre1969]

Here's how I calculate my rate of return...

First, I run two calculations:
A: (current balance - YTD contributions) / balance at beginning of year
B: current balance / (balance at beginning of year + YTD contributions)

Then I take the average of the two.

For instance, if I had $1M on 12/31/14, invested $20K so far this year, and yesterday's balance was $1.2M, I'd get the following:

($1.2M - $20K)/$1M = 1.18
$1.2M /($1M + $20K) = 1.17647...

(1.18 + 1.17647)/2 = 2.35647
2.35647/2=1.178235

Drop the 1, and you get 17.8235%

I do it this way, because I'm constantly adding money throughout the year, so part of those additional investments, depending on when I put them in, earn money (or lose money) as well. Rather than try to keep track of when I put in every little bit of additional investment, I figure this approach, helps give a reasonable average. One way assumes all the additional money went in at the beginning of the year, and the other way assumes it all went in at the end.

Anyway, using that approach, as of yesterday, I think I'm up about 4.3%. I ran the numbers this morning, but forgot the exact percent. However, the dollar amount came out to a new peak for me. So, WHEEEEEE!!!!

 

[audreyh1]

As of Nov 30, my retirement fund is only up 0.83% YTD after th initial withdrawal (no additions).

That's not enough to recover from my start of this year income withdrawal, so unless the market has a really nice Santa Clause rally that gives me another 2.8% gain on my portfolio, we'll be withdrawing money from a lower portfolio next Jan - a slight cut.