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|Subject: Re: Poll: Did your 401k recover from the 2008 de||Date: 12/27/2010 11:52 PM|
|Author: Rayvt||Number: 67978 of 81985|
annual market value change = 200 - 150 - 30 = 20
rate of return = 100* (20 / (150 + 30/2)) = surprise .. 12.12% !
Ah. I mis-interpreted what you meant by "market value change". So, yes, your formula is the same as my SWAG. You adjust both start & end values by 1/2 of the total contribution, same as my SWAG.
I used to use XIRR in Excel for my portfolio computations many years ago, but don't anymore since I discovered that this SWAG formula gives almost the same result for regular periodic contributions.
BTW, you don't include dividends in the XIRR, just additions & withdrawals.
It becomes quite complicated when you have irregular contributions and/or a mix of both additions & withdrawals. Like when you want to figure your returns for a taxable account that you shift money into and out of. But XIRR takes all that in stride, whereas none of the simpler methods do.
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