madbrain: "The formula I use to calculate my rate of return in my spreadsheet is as follows :=100*(annual market value change/(starting balance +(personal contributions+employer match)/2))This is the way I account for the fact that the contributions are made throughout the year - I count the return on half the contributions. It may not be very conventional or accurate. But I think it's good enough for me because I actually try to spread the contributions continue all the way to the last few payrolls of the year to maximize the per-paycheck match. Otherwise I have to wait until april of the next year to get the match true-up, and only get the true-up if I am still with the employer as of 12/31."If your contributions are made roughly every paycheck throughout the year and the employer match is made concurrently with each contribution, then your method is fair and reasonably accurate methodology.My pay periods are the 15th and the last business day of the month, so I prefer 5/12 rather than 1/2 (there is no new money invested from 1/1 -1/15 and the contribution from the last paycheck of the year has no time to earn anything.Employer matches are also paid differently. None from my current employer. IIRC, the last employer of mine that made one made lump sum payments at year end --- no time to earn anything --- or perhaps even in Q1 of the next year.What about earnings on subsequent contributions?Using your original numbers -"<<<Year 2008 was particularly brutal for me :Beginning balance 218277.76Contributions 15500Employer match 6238.7Earnings -93392.74Ending balance 146623.72Rate of return -40.76-----------------------------------------------2009 was much better, but not a full recovery.Beginning balance 146623.72Contributions 12575.73Employer match 4657.27Earnings 54405.46Ending balance 218262.18Rate of return +35.05-----------------------------------------------2010 is not as good as 2009, also . But my new employer allows me to make after-tax contributions, so the balance is growing faster, but not because of the rate of return. I realize there is still a week to go in 2010 and things can change, but hopefully not too much.Beginning balance 218262.18Contributions 16500After-tax contributions 17422.33Employer match 6318.9Earnings 37506.22Ending balance 296009.63Rate of return +16.33To summarize2008 : -93392.742009 : +54405.462010 : +37506.22So I still have $1481.06 to recover, ie. I recovered 98.4% of the losses, not accounting for inflation.>>>"If you had made no contributions for 2008, 2009 and 2010 and received no employuer contributions for those years, would your account have $216,796.70 ($218,277.76 - 1,481.06) or would it be less? If less, then you are attributing part of your "recovery" to earnings on dollars contributed since then, which I suggest is not entirely accurate.Regards, JAFO
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