The Motley Fool Discussion Boards

Previous Page  
Investing/Strategies / Retirement Investing 

URL:
http://boards.fool.com/yikesyouallsoundlikemathwhizzessomething20118740.aspx


Subject: Re: Year End Results...  Date: 1/8/2004 4:50 PM  
Author: 2old4bs  Number: 38419 of 78012  
Yikes, you all sound like math whizzes (something I'm definitely NOT). And since I'm not, can I run my simple way of tracking returns by you to see if it makes any sense? At the end of each calendar year, I calculate what my 'cost' was, that is to say, the net of all additions and withdrawals during the year, plus the 'cost' balance from last year. On a spreadsheet I then plot the cost at the end of each year, and the value at the end of each year. By comparing the two I get an 'overall' or 'cumulative' rate of return. So, if in year 1 I had invested (net) $1000 and at the end of that year had $1500 in value, that would indicate a 50% rate of return. If I did the same in year 2, ending with a cost of $2000 and a balance of $2300, my 'cume' rate of return is 15%. To calculate what the actual rate of return was for year 2 I take the $300 gain, deduct the $500 gain from year 1, and wind up with a loss of $200. So, according to my figures, my Year 2 return is a 10% loss. Is this a crazy way to do thisit seemed fairly straightforward to me ???? Anyhow, based on this calculation, my total portfolio return including annuities, 401K, IRAs and brokerage accounts for 2003 was 15.38%. Note that this doesn't quite make up my losses of 20.94% in 2000, 7.05% in 2001, and 4.77% in 2002. As a matter of fact, my portfolio is still underwater with a cumulative loss of .83% since 1994. This is due to the fact that I had many less dollars invested during the gangbuster years (19941999) then during the bear years (20002002). For example, my 15% return in 2003 netted me double the dollars that my 36% return in 1999 did. Hopefully now that I have a lot more dollars invested, the market will continue to turn around. Any comments on my method are encouraged, only gently please... 2old 

Copyright 19962015 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us 