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Calculating rate of return
Old 01-03-2021, 03:18 PM   #1
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Calculating rate of return

Seems I have seen a thread on calculating end of year rate of IRA return when you're also making withdrawals. Was it a spreadsheet, or just a simple formula? Search hasn't been any more helpful than my brain. Forgive my aging mind, but if someone would be willing to share I'd be very appreciative. TIA
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Old 01-03-2021, 03:55 PM   #2
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I think you’re looking for final balance minus additions divided by starting balance plus withdrawals. It assumes the withdrawals and additions occur evenly throughout the year. Some use an Excel formula (XIRR I think ) but some like the money chimp calculator.

http://www.moneychimp.com/features/p...calculator.htm
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Old 01-03-2021, 04:23 PM   #3
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You might find that your holding company does it for you more accurately than a formula assuming evenly distributed withdrawals. Vanguard does it for me.

What's your purpose in knowing? I stick mostly with index funds, and don't try to beat the market. I make sure my funds are tracking closely to their index, and don't have high expenses. Other than that, I'm looking out of interest, not for anything to take action on. With VPW, I use my year end balance to set my new year's spending target. My investment return has a large bearing on whether my spending budget can increase or not, but I don't use the return to calculate it.
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Old 01-03-2021, 05:46 PM   #4
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I use the excel XIRR function.
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