# Average Annual Returns - Do you know yours?



## thompsg4416 (Aug 18, 2010)

Just curious what people are getting on their weighted annualized returns. I was reading an article in the G&M this week and they were saying how most people don't know their annual returns. I had to admit I had an idea but not really that percisely. They offered this website so I tried it out.. 

http://www.weighhouse.com/resources/portfolio_return.aspx


I only started investing in early 2011 with a few thousand. Now I got my TFSA maxed. 

For 2011 and 2012 I have an avg annual return of 53% - I attribute alot of this to pure luck and timing. I invested alot of money in European banks just before they went on a big run and made out ok. If you include my contributions this year and the fact I've made very little money so far the avg annual return goes down to 32%. I'm pretty heavy in resources now.. hopefully I'll enjoy a run on these too. Obviously I have a pretty high risk tolerance too

Thoughts?


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## MrMatt (Dec 21, 2011)

thompsg4416 said:


> Just curious what people are getting on their weighted annualized returns. I was reading an article in the G&M this week and they were saying how most people don't know their annual returns. I had to admit I had an idea but not really that percisely. They offered this website so I tried it out..
> 
> http://www.weighhouse.com/resources/portfolio_return.aspx
> 
> ...


I've got an idea where my returns are, for some investments I know precise values, others I'm a bit more vague. Overall I'm somewhere around the stock market indexes
In reality it doesn't really matter, I'm doing quite well considering my asset mix and allocation.


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## Ihatetaxes (May 5, 2010)

I focus more on net worth growth. As long as my net worth continues to grow by over $100k per year, I don't really spend too much time thinking about annual returns. One of the reasons I'm happy with couch potato investing - I don't need to try to beat the market.


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## lonewolf (Jun 12, 2012)

google: trading journals 
There is differnt software & spread sheets out there.


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## Jungle (Feb 17, 2010)

I use XIRR function in excel or google spreadsheets. Keep a running total from Jan 1 to Dec 31. Start with your portfolio value, add new money to the portfolio and subtract money withdrawn from the portfolio. For some reason, XIRR does not like large transactions (multiple complete withdraws and additions) and new portfolios. You can use IRR for the first year, or just plain old total return. 

Usually once per calander year there is a post on financial webring or here, posting yearly returns. What started me tracking was seeing that thread on financial webring in 2010-11, I believe.

One thing to consider, average retruns are not the same as compounded returns. Quite often, average returns look much higher. XIRR will used compounded returns based on the callender year. Comounded returns are easier to understand, especially over multiple years. For example, you can say I've had a compounded annual return of 7% over 20 years...you can do the math with $1000, and it will add up to the same % gain as your portfolio.


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## pwm (Jan 19, 2012)

I record all my financial transactions in *Quicken.* I have done so for over 20 years. It uses the same formula as XIRR to calculate what it calls "Average Annual Return." It's proven very useful to me over the years to be able to tell how my investments are performing. I can't comment on any other software packages but Quicken works well for me.


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## Young&Ambitious (Aug 11, 2010)

There was a post in the general discussion forum around January on this topic. 

@thomps: Congrats on the 53% annualized return, that is great!

@Ihattaxes: I am jealous!


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## Cal (Jun 17, 2009)

I do know my annualized returns, but I would have to look them up, I don't really pay attention to them to be honest. I have certain goals as to what I would like my dividend income to be in 30 years or so, and I just focus on that.


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## My Own Advisor (Sep 24, 2012)

I'm with Cal and side ihatetaxes....although my NW is not growing by $100 k per year. Maybe someday.


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## thompsg4416 (Aug 18, 2010)

I think compounded annual returns is likely a better marker.. but what I don't get is how people don't care about what their returns are... if you don't know what your returns are how do you judge the value of your investments? Perhaps another investment might be better.. Its like not knowing what you get paid. How do you know the pay you receive is equal to the work you're doing or that you couldn't get paid more somewhere else for the same work... etc etc To each their own - I'm just saying I don't get the mind set.


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## jcgd (Oct 30, 2011)

I don't understand the need for your net worth to grow by 100 grand each year. The year after it grows 100 grand I would want it to grow more because I'd now have another 100 grand earning a return. You aren't doing so great if you save $130 grand and come out at years end with only 100 grand left and you aren't doing well if you earn 100 grand on a five million dollar portfolio.

I just don't get the logic. All I care about is the percentage return. Apples to apples.


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## Ihatetaxes (May 5, 2010)

jcgd said:


> I don't understand the need for your net worth to grow by 100 grand each year. The year after it grows 100 grand I would want it to grow more because I'd now have another 100 grand earning a return. You aren't doing so great if you save $130 grand and come out at years end with only 100 grand left and you aren't doing well if you earn 100 grand on a five million dollar portfolio.
> 
> I just don't get the logic. All I care about is the percentage return. Apples to apples.


I don't get what you don't get. 50% return of a tiny portfolio doesn't mean anything to me. In my world its about growing my net worth so that my wife and I can retire early with more than enough money to maintain our lifestyle as long as we live. In order to really be in tune with that, I do full net worth spreadsheets quarterly (sometimes monthly).


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## GoldStone (Mar 6, 2011)

Ihatetaxes, why does it have to be either or?

Like you, we've been growing our NW at a fast clip. We owe it to:
*a.* two good incomes
*b.* frugal lifestyle
*c.* very high savings rate

But that's not good enough for me. I also want
*d.* good investment returns

2009-2013 have been great. The decade prior to that... not so much. 2008 wiped out 10 years worth of compounding.


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## Jaberwock (Aug 22, 2012)

I keep records of my investment account values every month, and benchmark them against the TSX60 index, including dividends. I monitor my CDN investment account, my US account, RRSP and TFSA separately. I have a different investment strategy for each. I re-evaluate that strategy, and make changes whenever I see an account falling behind the benchmark. The best way to learn is to identify your mistakes. It takes only a few minutes a month to do the tracking, and it is an essential component of long term investing. 

I think it is important to monitor your performance against a benchmark. If you don't do that, you will never know whether your investments are succeeding or not. On average I have beaten the benchmark by 2 or 3 percentage points per year, over a period of about 15 years. Usually, I easily beat the benchmark in bad and mediocre years, and lag behind a bit in very good years.


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## Ihatetaxes (May 5, 2010)

GoldStone said:


> Ihatetaxes, why does it have to be either or?
> 
> Like you, we've been growing our NW at a fast clip. We owe it to:
> *a.* two good incomes
> ...


True enough.

I agree and do track returns as well. I just don't feel that they are as important as the other pieces of the puzzle (for me).


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## thompsg4416 (Aug 18, 2010)

You're obviously doing quite well and total NW is important.. However when looking at how well your investments are doing I feel percentage is a better indicator. Depending on how much you have invested the number will change each year but the percentage return you aim for should stay constant. I.E if you get a 100k return on 5mil big deal. If you get a 100k return on 100k you've done well. Both show a 100k return but if you're only getting 100k on 5 million you may want to look at what you're doing.


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## atrp2biz (Sep 22, 2010)

Agree. If you're making over a million dollars a year and your portfolio is losing half a million a year but are still increasing your net worth by $100k, there should be concern about how your portfolio is being managed. Therefore, performance assessment should be relative, not absolute.


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## james4beach (Nov 15, 2012)

I agree that it's very important to track your annualized rate of return and compare to the relevant benchmark. I don't think most people do this, because it's pretty hard to do -- you have to have meticulous records of exact inflows and outflows to an account and if you miss a single cashflow, the calculation is garbage. While I do carefully track my RRSP, I must admit that I don't readily have the figures for my other accounts but I intend to convert all my records to an XIRR equation.

Here's my RRSP, starting 2007-04-30. Pretty nice pre-crisis start date eh? Right about 6 years.

Using XIRR: my annualized return 2.86% ... but to interpret this you have to consider the risk exposure
XIU annualized return 1.21%
XSB annualized return 4.14%

My RRSP is entirely government and provincial bonds, and some CDIC-guaranteed GICs. No corporate bonds or risky paper. The relevant benchmark I think is iShares XSB, at 4.14% in the same period. So I'm under-performing XSB by about 1.3% a year, but their exposure is substantially riskier than mine with 38% corporate debt aka un-insured debt in their fund (mine has zero corp).

These comparisons are tough, and sobering. Can I justify underperforming by 1.3% annually?

Note: I use XIRR, but don't add cashflow events for dividends or bond coupons as mine remain in the portfolio (internally reinvested). I believe this is the correct way to do it, and I think cashflow events are only added when there is an external flow.


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## Spudd (Oct 11, 2011)

James - that's right, XIRR uses starting balance, any inflows/outflows, and ending balance. Dividends/bond coupons would be part of the ending balance, so no need to break them out separately.


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## humble_pie (Jun 7, 2009)

i for one believe that XIRR is misleading for retail accounts/portfs with certain types of profiles, because it capitalizes new contributions.

this means that accounts with continuous & relatively large new contributions (proportionately to the total MI) will show exaggerated high returns. RRSPs under active accumulation with no withdrawals would tend to demonstrate these exaggerations.

there are a few accounts under Money Diaries plus a model portfolio being run by one individual in this forum that distinctly show this type of deformation. The "returns" being claimed are too high. What has happened is that these portfolios have morphed into a form of net worth declaration, as opposed to calculation of return from investment.

apparently there are more accurate models than XIRR but they are far too difficult for an average retail investor.

inversely to a small retail account with high contributions would be a riff account with nothing but withdrawals. This would likely generate a deformed return on the low side under XIRR.

i would hazard a guess that XIRR was developed for large mutual funds & similar giant portfolios. These have active cash pools - new investor monies in, proceeds of dispositions in, redemption monies out, manager/custodial fees out, costs of new acquisitions out - but these cash pools are relatively small in comparison to the $100 million to several $$ billion under management.

actually as a small retail investor i find net worth statements are far more helpful. The only account i have that easily shows a true investment return is the tfsa, but that's only because mine is classic: maximum injections every year since january 2009 for a total of 25,500 in plus zero withdrawals.


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## Ponderling (Mar 1, 2013)

pwm said:


> I record all my financial transactions in *Quicken.* I have done so for over 20 years. It uses the same formula as XIRR to calculate what it calls "Average Annual Return." It's proven very useful to me over the years to be able to tell how my investments are performing. I can't comment on any other software packages but Quicken works well for me.


I'm singing the same song. Quicken file of all of my finances since 1992. Allows you to slice and dice data in quite few ways. If it cant do it natively, I export a more basic report as a comma delimited file and massage it in excel. Very powerul tool to let you quickly graph spending as well, if you feed it that data.


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## PharmD (Dec 21, 2011)

In reading the latest Moneysense I saw that in their discount brokerage comparison they stated that RBC Direct Investing and BMO InvestorLine provide personal rates of return although the later it said was limited. Does anyone have experience with either of these brokers and the rate of return they report? In particular I am interested in if they calculate it for any holdings you have at their brokerage or if it is only for certain products.

If what they provide is comprehensive and accurate information think that this is a huge advantage that they have over other brokerages. CMF may be an exception, but in real life the DIY people I know generally have no idea how they are doing compared to benchmarks and it was a frustration for me when I was doing the DIY thing. This was actually one of the reasons I moved to direct to consumer mutual funds (there were other reasons as well of course).


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## GoldStone (Mar 6, 2011)

humble_pie said:


> i for one believe that XIRR is misleading for retail accounts/portfs with certain types of profiles, because it capitalizes new contributions.
> 
> this means that accounts with continuous & relatively large new contributions (proportionately to the total MI) will show exaggerated high returns. RRSPs under active accumulation with no withdrawals would tend to demonstrate these exaggerations.


Can you post a simple XIRR example that exhibits this effect?


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> i for one believe that XIRR is misleading for retail accounts/portfs with certain types of profiles, because it capitalizes new contributions.
> 
> this means that accounts with continuous & relatively large new contributions (proportionately to the total MI) will show exaggerated high returns. RRSPs under active accumulation with no withdrawals would tend to demonstrate these exaggerations.
> 
> there are a few accounts under Money Diaries plus a model portfolio being run by one individual in this forum that distinctly show this type of deformation. The "returns" being claimed are too high. What has happened is that these portfolios have morphed into a form of net worth declaration, as opposed to calculation of return from investment.


XIRR provides an accurate picture of annualized returns of the average dollar in the portfolio. Sure, if one invests $100 on Dec/30 and has $110 on Dec/31, XIRR will compute the returns as 3650%+, so caution is definitely warranted in interpreting the number but it is still accurate.


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## humble_pie (Jun 7, 2009)

goldstone the examples are here in this forum. I hinted clearly at them.

i certainly like & admire the principals who are XIRRing their "returns" to lofty levels & i am 100% positive they are doing this with no bragging intent whatsoever. It's just that their accounts keep on collecting big new contributions (ratio to money involved) with no withdrawals, so hey presto! their returns do become quite extrafabulicious.

i believe it was Sampson who recently lamented how exceptionally difficult it is to find an investment return formula that can do the job for a retail account. I for one agree with this. That's why i tend more towards net worth as an indicator of how one is doing in the real world (i include only investment accounts plus a house in NW, so it's easy to subtract the house to see how the investments are doing) (meanwhile there's my tfsa to cheer myself up with)


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## humble_pie (Jun 7, 2009)

CC i'm referring to brand new contributions that are frequently injected into said account along the way, not the scrawny $10 of interest/dividends/capital gains the original $100 contribution may have earned, also along the way.

it's when these new contributions are in large proportion to the account - unlike a mutual fund's cash pool - plus no withdrawals that the upside XIRR distortions occur imho.


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## GoldStone (Mar 6, 2011)

XIRR calculation adjusts for contributions and withdrawals. They are not part of XIRR return.

If you see exaggerated returns that don't make any sense, chances are the individual isn't doing XIRR correctly.


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> CC i'm referring to brand new contributions that are frequently injected into said account along the way, not the scrawny $10 of interest/dividends/capital gains the original $100 contribution may have earned, also along the way.


Contributions alone have zero effect on IRR. If I make $10,000 contributions to an account every day of the year and I have $36,50,000 at the end of the year, I've made 0%. XIRR will tell me exactly that.


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## humble_pie (Jun 7, 2009)

goldstone i believe they are doing XIRR correctly.

i don't see that the formula "adjusts" for contributions & withdrawals, though.


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## GoldStone (Mar 6, 2011)

The whole point of XIRR is to take into account contributions and withdrawals.


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## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> Contributions alone have zero effect on IRR. If I make $10,000 contributions to an account every day of the year and I have $36,50,000 at the end of the year, I've made 0%. XIRR will tell me exactly that.


but in your example the daily 10,000 began earning income from jan 1st of the year, also income on 20,000 on jan 2nd & so on throughout the year. Why then would XIRR falsely report 0% return?


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## humble_pie (Jun 7, 2009)

goldstone i still believe XIRR capitalizes contributions prematurely each:

like i say, it's when you get accounts with heavy contribs/zero WDs or the inverse that the exaggerations appear imho ...


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> but in your example the daily 10,000 began earning income from jan 1st of the year, also income on 20,000 on jan 2nd & so on throughout the year. Why then would XIRR falsely report 0% return?


XIRR is not falsely reporting a 0% return. The sum of contributions equals the account balance at the end of the year, so XIRR calculation of 0% is accurate.


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## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> XIRR is not falsely reporting a 0% return. The sum of contributions equals the account balance at the end of the year, so XIRR calculation of 0% is accurate.


but like i said, what about the investment earnings from the capital injected? after all, in this example, half the capital has been in the account for more than half-a-year ... it has to have generated some earnings or possibly some losses ... i don't see that a 0% return could be anything other than false ...


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## GoldStone (Mar 6, 2011)

It's not a matter of opinion. If you are right, you should be able to post a simple example to prove your point.


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## humble_pie (Jun 7, 2009)

moneyGal recently proposed a rival portfolio return calculator that had a algebraic formula so horrific i promptly blocked it out of my mind forever & ever.

MG herself probably sails along comfortably with the thing, however, whipping out return calculations for clients on the back of a restaurant napkin in a split second whenever necessary ...

i found myself wondering whether the model she cited might not be more accurate than XIRR for small retail accounts, in particular those subject to large new contributions/no WDs & the inverse.


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> but like i said, what about the investment earnings from the capital injected? after all, in this example, half the capital has been in the account for more than half-a-year ... it has to have generated some earnings or possibly some losses ... i don't see that a 0% return could be anything other than false ...


Maybe some of the contributions did have gains. Maybe some did have losses. XIRR doesn't care what happened to each individual contributions. It only cares about cash flowing into and out of a portfolio and the end value of a portfolio. In this case, end value exactly equals contributions, therefore rate of return is zero. If you believe it is false, what should the rate of return be?


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## atrp2biz (Sep 22, 2010)

CC, is there a way we can share Excel files? I know there are security issues with that, but wondering if there's a way around that.


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## GoldStone (Mar 6, 2011)

humble_pie said:


> but like i said, what about the investment earnings from the capital injected? after all, in this example, half the capital has been in the account for more than half-a-year ... it has to have generated some earnings or possibly some losses ... i don't see that a 0% return could be anything other than false ...


When you add new money to your brokerage account, does it automatically earn income or generate losses? No it doesn't. It just sits there doing nothing. The return is zero. 0% return in CC's example is the right answer.


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## humble_pie (Jun 7, 2009)

GoldStone said:


> When you add new money to your brokerage account, does it automatically earn income or generate losses? No it doesn't. It just sits there doing nothing. The return is zero. 0% return in CC's example is the right answer.


we are talking about an annual return calculation, i thought?

when i add new money to brokerage account, it starts working. It doesn't sit around "doing nothing." In the quote you've reproduced, i was referring to a large amount of $$ (CC's example, not mine) at work within an account over more than half-a-year. In an annual return calc there would surely have to be a "return" - either positive or negative - from that large amount.


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## atrp2biz (Sep 22, 2010)

The key to using the XIRR is that you assume a cash outflow today using the current value of the portfolio. HP, in your example, if you model a large cash inflow yesterday, the implied cash outflow today would essentially calculate a zero return on yesterday's cash inflow.


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## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> ... XIRR ... only cares about cash flowing into and out of a portfolio and the end value of a portfolio.


agreed. This is where the deformations appear imho. When the new contributions/injections of fresh capital are too high & there are few or no withdrawals.



> ... what should the rate of return be?


ah, the $64 billion question. I'm in Sampson's camp, it's impossible to find a really good returns calculator. 

did you happen to notice MoneyGal's proposal? it looked quite tasty to this poor pie. Although incomprehensible each:


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## atrp2biz (Sep 22, 2010)

HP, we may be posting past each other and trying to compare dollar-weighted returns vs. time-weighted returns. If so, maybe using the value per portfolio unit is what you are talking about?

The administrative burden with calculating time-weighted returns is that you have to note the value of the portfolio everytime there is a cash inflow/outflow.


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## MoneyGal (Apr 24, 2009)

(posting on my way to the airport)

XIRR = dollar-weighted return = it accounts for every dollar invested

Modified Dietz (what I posted; you don't need to understand it to use it) = time-weighted return = it accounts for every dollar's return over time

Neither is perfect and all rely on simplifying assumptions.


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## cainvest (May 1, 2013)

Guess it kind of raises the question, how much info does one really need for long term investing?
Does one really need to keep track of all dates/times of book values purchased/reinvested, dividends received, etc or does monitoring simple investment asset value growth good enough?


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## james4beach (Nov 15, 2012)

humble_pie I'm not totally convinced of XIRR either as I haven't studied its underlying math, but it would help if you could post an example of what you mean. I'll look through the thread again, maybe it was posted and I missed it.

This XIRR kind of 'spreadsheet' is easy to share because you just have to post a series of date & cashflow numbers, with the final item being a negative cashflow for the whole portfolio amount (i.e. liquidating the whole portfolio at its current value)

In the process of discussing this, we're demonstrating why few people track returns... it's hard to do and there's a lot of uncertainty about the right way to do it.


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## MoneyGal (Apr 24, 2009)

Math of XIRR: http://www.ipcc.ca/files/rate_of_return/XIRR_ROR.pdf

(just a random link that includes the underlying equation)

Internal rates of return that incorporate cashflows are tedious to calculate by hand.


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## MoneyGal (Apr 24, 2009)

Now that I have posted the underlying math, here is a longer, better explanation of what's involved in calculating XIRR (not the mechanics but the rationale):

http://www.financialwebring.org/gummy-stuff/xirr.htm


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## GoldStone (Mar 6, 2011)

I posted two simple OpenOffice examples in this thread:

*Question to OpenOffice users: how to calculate XIRR?*
http://canadianmoneyforum.com/showt...ion-to-OpenOffice-users-how-to-calculate-XIRR

The first example shows how to calculate a one year return.
The second example shows how to calculate running multi-year returns.

If you have a simple portfolio such as...

- one TFSA, or
- one RRSP, or
- a pair of TFSA+RRSP

... XIRR is trivial to use. Tedious, but trivial.


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## GoldStone (Mar 6, 2011)

cainvest said:


> Guess it kind of raises the question, how much info does one really need for long term investing?
> Does one really need to keep track of all dates/times of book values purchased/reinvested, dividends received, etc or does monitoring simple investment asset value growth good enough?


You have to keep track of ACBs, dividends and interest payments in the taxable accounts. You are responsible for reporting accurate numbers to CRA, not your broker.

You don't have to do it in the tax-sheltered accounts.

Asset value growth doesn't tell you the full story. Suppose you add 10K to your portfolio each and every year. Your investments lose 1K annually. Your assets keep growing yet your IRR (internal rate of return) is negative. Wouldn't you want to know this?

That was an extreme example, of course. Here's a more common example: your balanced portfolio of stocks and bonds trails 5 year GICs. Your assets keep growing, yet you are not being compensated for the stock market risks. This would be helpful to know, don't you think?


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## Sampson (Apr 3, 2009)

reading through....

pie, I don't remember what I wrote. I personally use XIRR. I do vaguely remember the thread and discussion, and MGal, giving us detailed methods that I am too lazy to consider using.

Now I recall a few more details and your hints within the post. I think I was suggesting it can be much easier to treat your portfolio like a mutual fund, but this like you mentioned assumed few inflow or outflows - easy for the TFSA. BUT, if you are in the accumulation phase and adding money monthly, quarterly, then it does become tedious, but like Goldstone mentions, still 'easy'.

I think the important question is if the fine level of scrutiny matters. i.e. how inaccurate is the estimate method compared to XIRR with many inflows. If a rough method is off by 5-10% compared to XIRR, (1) is this a meaningful amount? and (2) would you adjust your strategy to compensate?

(1) depends on your portfolio size,
(2) I wouldn't - so XIRR is not required all the time (I usually do this every 2 years)


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## GoldStone (Mar 6, 2011)

Sampson said:


> I think the important question is if the fine level of scrutiny matters. i.e. how inaccurate is the estimate method compared to XIRR with many inflows. If a rough method is off by 5-10% compared to XIRR, (1) is this a meaningful amount?


The rough estimate method requires:
1. starting balance
2. contributions and withdrawals netted
3. final balance

This is not much easier than doing XIRR, if easier at all. XIRR requires an itemized list of contributions and withdrawals with dates. Rough method requires the net total. Either way, you have to track inflows/outflows and balances.


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## My Own Advisor (Sep 24, 2012)

If you index invest, is there any point in calculating annual return? Why care?

I could see merit for strict dividend investors but indexers only?


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## james4beach (Nov 15, 2012)

My Own Advisor said:


> If you index invest, is there any point in calculating annual return? Why care?


If the account really does have just one or two index funds in it, I don't see the point either. But as soon as you get "fancy" in any way I think it's worth it, e.g.

Let's say you have 5 or 10 index funds, and at this point may wonder (rightfully so) if you would have been better off if you just held one stock index and one bond index. Checking your performance over a long period can be helpful, you may discover that you've gotten too complicated even if you just hold index funds.

I've seen portfolios that have morphed into something like: XIU, XEG, XGD, XBB, XCB, etc. along with many trades as they attempt to time the market. It's definitely worthwhile calculating the performance and comparing it to simple old balanced XIU & XBB


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## Sampson (Apr 3, 2009)

GoldStone said:


> This is not much easier than doing XIRR, if easier at all. XIRR requires an itemized list of contributions and withdrawals with dates. Rough method requires the net total. Either way, you have to track inflows/outflows and balances.


Depends on the amount of activity. Quite easy to count dollars in (I don't have any dollars out) several times per year and get the sum total. This really is much easier than inputing dates too, marginally, but again I question the value of precise measurements annually or more frequently. My investing is over 30-50 years, the +/- 10% isn't going to make a difference in the portfolio. It will help stroke the ego if your returns beat a benchmark though.

Actually, I take some of the above back. I finally recall the discussion. Someone was asking whether they should calculate the returns on each of their holdings. To that I answered no way - calculate the entire portfolio together. XIRR is relatively easy if you view the portfolio in entirety.


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## cainvest (May 1, 2013)

GoldStone said:


> You have to keep track of ACBs, dividends and interest payments in the taxable accounts. You are responsible for reporting accurate numbers to CRA, not your broker.


Yes the paper work on the taxed account is a bit higher, kind of glad I've moved away from it. I still receive a T3 from one fund in that account and but haven't realized any capital gains or losses recently. Il doesn't require any additional tracking on my part.




GoldStone said:


> You don't have to do it in the tax-sheltered accounts.
> 
> Asset value growth doesn't tell you the full story. Suppose you add 10K to your portfolio each and every year. Your investments lose 1K annually. Your assets keep growing yet your IRR (internal rate of return) is negative. Wouldn't you want to know this?
> 
> That was an extreme example, of course. Here's a more common example: your balanced portfolio of stocks and bonds trails 5 year GICs. Your assets keep growing, yet you are not being compensated for the stock market risks. This would be helpful to know, don't you think?


I've taken a slightly different approach, I just use a compound interest spreadsheet of my retirement plan (uses fixed rate and yearly investment amount) vs the actual yearly total asset amount. From this I get a simple percentage difference of where I am in relation to my plan as the years go by.


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## Four Pillars (Apr 5, 2009)

My Own Advisor said:


> If you index invest, is there any point in calculating annual return? Why care?
> 
> I could see merit for strict dividend investors but indexers only?


Some of us indexers just like to measure things. Whether there is any value in it is not the point.


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