Calculating your performance

[Uncertain Times]

Just wondering how people calculate their performance in the market.

EG I started with $50,000 deposited into my account. I have bought and sold some shares for $5,000 profit and haven't had to add in any more to my account. I now have $55,000 invested but they are currently valued at $47,500.

So am I down 5% on my initial investment (50 - 47.5) or am I down 14% (55 - 47.5) with the re-investment of my profits? I realise it is not a loss until the shares are sold but if you are trying to track your performance over time how would you do it?

Does it come to a perception in your thinking or is there a standard practice that should be followed?

 

[beamstas]

Just wondering how people calculate their performance in the market.

EG I started with $50,000 deposited into my account. I have bought and sold some shares for $5,000 profit and haven't had to add in any more to my account. I now have $55,000 invested but they are currently valued at $47,500.

So am I down 5% on my initial investment (50 - 47.5) or am I down 14% (55 - 47.5) with the re-investment of my profits? I realise it is not a loss until the shares are sold but if you are trying to track your performance over time how would you do it?

Does it come to a perception in your thinking or is there a standard practice that should be followed?

You are down 5% on the account
But you are drawndown 14%

 

[Jack Payback]

Traditional practice is to measure performance based on your starting amount at the start of the period (or year), or from inception of the account.

In this case your $50K is your starting point.

 

[The_Bman]

and haven't had to add in any more to my account.

And a good thing too! It'd be an expensive hobby if you need to add money to maintain a portfolio level!

If you make deposits to your account (to invest...) e.g. $500 a month from salary, calculate your profit by:

Profit = Ending Capital - Starting Capital - Additions + Withdrawals

It gets a little more complicated if you want to calculate your performance.

You need to add each deposit by the number of days left in the period divided by the total number of days minus each withdrawal by the number of days left in the period divided by the total number of days. The period can be any time definition e.g. financial or calendar year, quarter etc.

 

[peterh]

I use the XIRR function in Excel to calculate returns.

 

[tommymac]

You are down 5% on the account
But you are drawndown 14%

I agree with you Beamstas.

Don't try to fool yourself with statistics but be realistic.

 

[clayton4115]

yeah i started with $5000 early this month (May) and now i am at $5345 up 6% but shorting those bastards! lol