Originally Posted by Gotadimple
Well, I look at the value of the TOTAL portfolio as of the end of the prior year, and each time I update values, my spreadsheet compares the value of the current total portfolio and calculates a percentage gain/loss from the 12/31 figure.
I also hold about 25 investments ranging from Money Markets, CD's, index funds, and individual stocks.
-- Rita, the "guy"
That works OK if you have made no "deposits" or "withdrawals", but otherwise you're not computing the true return. That would be similar to the Beardstown Ladies method.
Not to disparage any particular individuals on this board, but I'm always skeptical of people stating their investment returns because many don't really understand how to compute them and there are many ways to make mistakes (not to mention sometimes cherry picking the data). Not taking into account cash flow in/out of the portfolio is one of the biggest and easiest mistakes to make.
Quicken is not very helpful either because it will not compute a total portfolio return including non-investment type accounts like CDs, savings, MMs, etc. So I've gone to a lot of work tracking my portfolio return in a spreadsheet using the XIRR function in Excel. This requires the close tracking of cash flow in/out of the portfolio.
BTW, as of Sep 19 my total portfolio is down about 6.4% YTD, 7.5% from the market high in Oct '07.
I'm currently 67/33 stocks/FI. And I've poured $57K into stocks this year; 30K of new $, 27K moved from FI (actually more than that since I moved a bunch that was in TSP Lifecycle funds to all stocks in the 1st quarter, but it's too complicated to figure out), with 32K going in since the end of July. I'm optimistic that I'll look back at this as a great buying opporunity. Time will tell!