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Measuring Returns

Discussion in 'Beginner's Lounge' started by Moose_, Jan 20, 2019.

  1. Moose_

    Moose_

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    Hi All,

    Each month for the next few years I plan on purchasing a parcel of shares. My question is how do I measure my annual performance against the index when I'm constantly growing the portfolio with new acquisitions?

    Thanks
    Moose
     
  2. Smurf1976

    Smurf1976

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    I’m not suggesting it’s the only way but the method I use is to simply base it on the total funds allocated to share investment regardless of whether it’s actually invested in shares or is siting as cash.

    Eg $100 available for investing with $70 in shares and $30 in cash. If I wanted to calculate a % return over whatever period of time then I’d base it on the $100.

    Reason = it’s simple, easy and takes account of the fact that cash is still an asset.
     
  3. Moose_

    Moose_

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    Thanks Smurf. Problem is there will be no actual cash component for this portfolio, the cash is savings accumulated each month which is deployed to shares once a month...
     
  4. Zaxon

    Zaxon The voice of reason

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    You need to create yourself an "index". Initially, that's just the value of your shares. When you add new cash, adjust the index calculation so it keeps the same value.
     
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  5. willy1111

    willy1111

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    I use a VAMI spreadsheet which I created in Excel...Value Added Monthly Index.

    Do some research, happy to assist further if it is what you are after.
     
    Moose_ likes this.
  6. galumay

    galumay learner

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    TWIRR in excel is how i do it, if you google it you will find examples.
     
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