UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next
Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76112  
Subject: Re: How to calculate rate of return Date: 9/19/2008 12:43 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
Hi Fletch

Depending on how "accurate" you wanted to be?

Paul showed a simple way to look at the problem. Just take the amount lost, annualize that and then calculate the return. This gives a pretty good estimate

Another way to look at this would be to say you lost $1500 per month.

So you started with $70,000, lost $1,500 over a month dropping the account to $68,500 and then contributed $1,500 to get back to $70,000.

So $68,500/$70,000 shows you get 97.9% returned or call it a 2.1% loss rate per month. Which you annualize by raising that to the power of 12 (number of months)

( .979 )^12 which is .775 (77.5%) returned or a 22.5% annualized loss rate

and then depending on your timing for contributions - and final end date you could adjust the estimate even closer.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Berkshire Hathaway

Berkshire Beyond Buffett Event
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.