Calculating portfolio returns

[FFNow]

I don't know if this has been asked before. I suppose not as I did a search but could not find any such threads. Pardon me if this has been asked before.

I would like to ask how do I calculate my portfolio returns, especially when I inject money in and out?

[newborn1000]

Use the XIRR function in excel............

Its the internal rate of return, it takes into account money moving in and out........

Google to find out how to use it properly......

[FFNow]

Thanks. Googled "using XIRR function to calculate portfolio return" and got quite a number of good hits.

[nitro]

Is XIRR a good formula to calculate portfolio return, if my portfolio focus on dividends only?

Tried using XIRR to calculate, but turned out to be zero.

Thanks

[jamzc]

Is XIRR a good formula to calculate portfolio return, if my portfolio focus on dividends only?

Tried using XIRR to calculate, but turned out to be zero.

Thanks

you prob typed it wrongly, cant be 0 if there were changes in portfolio value. just add all div into your current portfolio value together with holdings at market price

[corydorus]

See me blog on XIRR. Is simple to use though need some small learning curve and playing around the figures.
XIRR uses Guess method to derive the answer so need to adjust the "Guess" figure. Assigning signs ( + and -) order, and dates order may fix your problem.

Is a good baseline for comparison out of Excel. Forget about other complex methods as you will never get enough base to compare.

[D123]

For every change in the "direction" of the cash flows i.e. positive to negative, or negative to positive, there is a chance of obtaining one more answer for the IRR formula.

Thus, if your portfolio sees frequent changes, then the third input in your Excel XIRR formula becomes more important, and you should enter something as close as possible to the real answer that depicts your portfolio performance.

For example, if your overall portfolio is down about 5%, without too many drastic cash flows, put in a guess of about -5%. Excel will return the answer closest to your guess.

For more understanding of the mathematics behind this, google "multiple IRR".

[setan]

Hi All,

If you have calculate XIRR of your portfolio to be 7% over 7 years, what does it tell me? Is it that your portfolio have increase by 7% compounding yearly?

Could kindly help me to understand? Thanks.

setan

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Hi All,

If you have calculate XIRR of your portfolio to be 7% over 7 years, what does it tell me? Is it that your portfolio have increase by 7% compounding yearly?

Could kindly help me to understand? Thanks.

setan