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Fools: I have a question that I have not seen answered on these boards previously and as 2004 has just ended I think it is timely.

For those who contribute to their investments monthly and maybe with a lump sum tossed in here and there, can your investment broker provide you with an annualized rate of return?

I think this is a critical piece of information because without it how can you compare against benchmarks to see how you did.

I would appreciate any and all comments including any software that may calculate the return.

Fletch52
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Fletch52: "I have a question that I have not seen answered on these boards previously and as 2004 has just ended I think it is timely.

For those who contribute to their investments monthly and maybe with a lump sum tossed in here and there, can your investment broker provide you with an annualized rate of return?"


Just do what the Beardstown Ladies did; ignore ongoing contributions and calculate annual gain by using year-end balances. You too might get a book published and make some more money.

Regards, JAFO
(to do the calculation properly, you need to calculate for each period between contributions, and then annualize to a CAGR; if ammounts and periods are irregular, then the math gets to be a PITA)



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I would appreciate any and all comments including any software that may calculate the return.

Hi Fletch,

Here's one thread where calculating returns was discussed:

http://boards.fool.com/Message.asp?mid=21651177

I downloaded the (apy) Excel function mentioned in the last post of the thread.

2old
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On a monthly basis, the formula is:

100*(Amt_at_end_of_month - Amt_at_beginning_of_month + Amt_withdrawn - Amt_deposited)/Amt_at_beginning_of_month

However, there is obviously a time distortion, depending on when you made deposits or withdrawals.

The *right* way to do it is to apply that formula on a daily basis. This gives you the daily return. Then you can accumulate this on a daily basis to get your return over any period of time.

But just don't forget to update your spreadsheet every day!

That is a bit too much even for me.
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Fools: Thanks again for all your suggestions. I tried the monthly ROI and then combined to get an annual rate of return. It involved a bit of guesswork because I was not certain of end of month values for first six months of the year. For 2005 I will be ready however!

Fletch52
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