For questions relating to various measures of the rate of return on an investment, e.g. Internal Rate of Return, Financial Management Rate of Return, etc. Note that questions about these terms that don't apply to personal finance or actual problems you face, e.g. homework questions, are probably ...

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5
votes
3answers
461 views

What is the “rule of 70” or “rule of 72” with regards to investment, and how do I apply it?

What is the "rule of 72" (sometimes called the "rule of 70") with regards to investment, and how do I apply it?
4
votes
3answers
611 views

If a mutual fund did really well last year, then statistically speaking, is it likely going to do bad this year?

I am a looking at a specific fund that made a killing last year. I know that this is a speculative question, but I am interested whether what I am saying held true over the years. Does a mutual fund ...
3
votes
3answers
97 views

Given a certain yearly savings, how much can I spend on a capital improvement? NPV of future cash flow

I'm seeking a simple online calculator, or explicit instructions for a spreadsheet, for answering simple real-world scenarios like this: Our insurance company is offering a 30% discount on an ...
2
votes
1answer
84 views

Calculating Daily Returns for Futures Contract

I am calculating daily returns for a position in a futures contract. I am a little stuck with margin and how to account for it. I specifically dont understand how return is calculated after Margin ...
4
votes
3answers
91 views

How can I calculate yearly interest of my investment gain?

I'm trying to figure out the yearly interest of a potential investment. Lets say I invested $10 000, 13 days later i cash out and I now have $10 500. The interest here is 4,76% for 13 days. But can I ...
2
votes
1answer
47 views

Investing in DHA property in Queensland

I was interested in investing in DHA (Defence Housing Australia) properties in Queensland. Does anyone who may have any DHA investment properties within Queensland know how these properties have ...
2
votes
2answers
49 views

Is there any calculator where you can put a set amount of money in and track the actual returns of the S&P 500 between any dates provided?

I want to find a calculator where between any two dates provided, the return on a given amount of money is calculated for the actual returns of the S&P 500 between those dates.
1
vote
0answers
63 views

What are the standard industry practices or disclosures for computing compounded interest on retail deposit accounts in the United States?

I'm seeking to understand how my bank calculates the interest on my various deposit accounts (Money Market, Interest Checking, Savings, Certificate of Deposit) in order to simulate and predict it to a ...
3
votes
3answers
140 views

I'm a programmer and need a formula for calculating overal ROI [duplicate]

I'm programming a web app to track my hedge fund performance. I'd like to find my overall ROI for all time. If I had a beginning balance and my current balance then finding the ROI is easy. For ...
4
votes
1answer
77 views

How do I maximise my returns when using margin in my brokerage account?

Suppose I have an investment account with $10,000 in it. I have a margin rate of 10% per year. For a total of $2.7 interest per day, or $1,000 per year. I can invest in a high risk ETF with returns ...
5
votes
4answers
148 views

Is there a term for the risk of investing in an asset with a positive but inferior return?

For example, say I invest in a 5-year certificate of deposit at 3% annually. Let's assume the bank delivers on time (no defaults). However, a month after I buy it, another bank offered a 4% 5-year ...
4
votes
3answers
254 views

Using Loan to Invest - Paying Monthly Installments by Selling Originally Bought Shares

I'm trying to determine how much profit or rate of return is required from a financial instrument, say stocks, to break even with a loan taken out for this. I'll use specific numbers to simplify. ...
2
votes
1answer
138 views

Is the very long-term growth of the stock market bound by aggregate net income? [closed]

When talking about residential property, people sometimes throw around the idea that over the very long-term aggregate home prices can't rise faster than aggregate income. i.e. even if for a while ...
1
vote
3answers
727 views

What does the average log-return value of a stock mean?

Assuming log-return is defined by the log of the price today divided by the price yesterday. Does knowing this single piece of information (the average log-return of a stock over a long period of ...
1
vote
1answer
100 views

Calculating required rate of return for an income-generating savings account

Say someone has £1m. They want it to generate an increasing level of income, starting from £25k in year 1, and increasing at a rate 7% + inflation pa, such that the end value of the savings after 20 ...
0
votes
0answers
42 views

How do I account for deposits and withdrawals when measuring cumulative daily returns? [duplicate]

I think this works best as an example. Let's say I start with $100 and trade for five days. Equity is how much money I have, c. ret represents cumulative returns, and d/w means deposits/withdrawals. ...
3
votes
3answers
104 views

What is the theory behind Rick Van Ness's risk calculation in the video about diversification?

In the video, Rick Van Ness states the following scenario: Stock A has a 7% return with +/- 1% risk Stock B has a 3.5% return with +/- 0.5% risk Stock A and B are perfectly negatively correlated. ...
-1
votes
1answer
539 views

Discount Rate vs. IRR

The more I learn about the discount rate and IRR the more confused I get.... This is related to real estate. My confusion is that I've read that you should use your desired rate of return for the ...
4
votes
1answer
777 views

Calculating historic S&P 500 returns

I'm using the S&P 500 data provided by Robert Shiller which goes back to 1871. I've then calculated the percent return for each month, the simple arithmetic average is 0.43%. Calculating the ...
4
votes
1answer
168 views

Where to find the 5 or 10 year returns for a mutual fund?

I’m researching some mutual funds and am trying to find the 5 or 10 year return. However, all I can find is the YTD return. For example, Yahoo Finance shows the Yacktman Focused Svc (YAFFX) has an ...
10
votes
2answers
795 views

Is there a term that better describes a compound annual growth rate (CAGR) when it is negative?

When calculating rates of return for an investment or portfolio over time, whether to report or compare performance, one frequently calculates the Compound Annual Growth Rate (CAGR). I've got a ...
7
votes
1answer
486 views

Yield of a municipal bond with a sinking fund?

How do I calculate my expected return if I buy a municipal bond at a premium with a sinking fund feature? For example, I'm looking at a bond with a coupon of 5.5%, maturing July 2015, with the ...
-2
votes
2answers
365 views

What is the compound annual growth rate of the major markets?

What historical compound annual growth rates (CAGRs) have the major markets provided? Data as far back as has been recorded is preferable. Specifically I'm looking for returns of: Short-term, ...
1
vote
1answer
3k views

How to calculate the standard deviation of stock returns?

I'm trying to learn the the Black–Scholes option pricing formula and one of the elements of that formula (according to http://bradley.bradley.edu/~arr/bsm/pg04.html) is the "standard deviation of ...
7
votes
2answers
6k views

What does Personal/Internal Rate of Return mean for a 401k?

My 401k statements show a "Personal Rate of Return" (also called Internal Rate of Return), and I am curious what this actually means. Does this indicate how my funds are performing in the market? Or ...
4
votes
4answers
1k views

Time-Weighted Rate of Return & Money-Weighted Rate of Return

Background I am trying to figure out the computational difference between Time-Weighted Rate of Return (TWRR) and Money-Weighted Rate of Return (MWRR). Let's say, I have a portfolio looking like ...
2
votes
3answers
397 views

Computing portfolio return with net inflow/outflow

in his book "The four pillars of investing", the author describes this simple method to compute the rate of return for a portfolio that has a net inflow of cash: Without in- or outflow, the rate of ...
3
votes
1answer
158 views

Use my savings to pay out my mortgage on my rental apartment?

My rental apartment at this point is making me a 5% ROI per year. My bank is currently charging me a 5.87% Interest rate on the mortgage, which means I am putting from my pocket to keep this apartment ...
1
vote
2answers
170 views

Are the guaranteed returns of regulated utilities really what they sound like?

In the last few days I've stumbled upon two-year-old editorials like this one and this one stating "as a regulated utility, publicly traded [PG&E] shareholders benefit from a guaranteed 11.35 ...
11
votes
3answers
897 views

How can I determine if my rate of return is “good” for the market I am in?

I am considering a small investment to get started with. What percent rate of return is considered to be good return on investments made in a stock market? I read somewhere that 25-30% is considered ...
3
votes
3answers
211 views

Table of how many years it takes to make a specified return on the stock market?

Suppose I want to know "if I want to make a 30% return on the stock market, how many years should I expect to wait?" I know the real answer is "it depends - if the market does horrible it could ...
2
votes
4answers
258 views

Why should I worry about the variance of the return?

I have this doubt (I hope that this is not a completely silly question). If my growth rate depends on the long period average return, why should I worry about the variance of the return? i.e. over the ...
4
votes
1answer
1k views

How can I calculate a “running” return using XIRR in a spreadsheet?

I should say that I'm not married to XIRR, I just want to calculate the return on a running basis in a column next to dates, deposits and balances. Here's a screenshot of a simplified spreadsheet in ...
2
votes
6answers
782 views

Help me understand the oddity of percentage gains and losses?

If you start with $100K, and you get a 50% gain, it's $150K. Then, you get a 50% loss: now it's $75K. Reverse the order (i.e. lose 50%, gain 50%), it's the same thing (a 25% loss). So, 50% up then ...
0
votes
2answers
339 views

Diversified portfolio return calculation & comparison to return from real estate only?

Here's a sample portfolio. If we assume that he invested $100K in the beginning (2005), is it correct that if he sold his entire portfolio and the end of 2009, he would have received $121,394? ...
9
votes
5answers
303 views

Are long-term bonds risky assets?

I think bonds are debt/loan and fixed-income, so they are risk-free, both short term and long term. But it seems like Bodie's Investment thinks long-term bonds are risky: For example, assume that ...
8
votes
2answers
182 views

How do I account for newly added money when computing my rate of return?

I have a simple spreadsheet where I track the balance in my investment account. What should I do to handle new deposits in the account? For example: End of Day 1: balance = $100 End of Day 2: ...
4
votes
4answers
3k views

Typical return for an IRA? How can I assess if my returns were decent?

The year to date return on my IRA is currently 5.3%, the DJIA is 9.5%, and the NASDAQ is at 7.7%. Is this normal or should I be disappointed? I'm just starting to pay attention to this kind of ...
4
votes
2answers
347 views

Discussing real estate appreciation: Compound vs. simple interest?

When people say real estate has appreciated 8 % over the past 5 years, do they mean 8 % compounded annually? or simple interest annually?
7
votes
1answer
119 views

Is there a simple term to describe the non commutative property of decreasing and increasing a value by some X percentage?

I.e., $100 decreased by 20% requires an increase of (1/(1-0.2))-1) to return to $100. Is there a simple name that refers to this?
1
vote
2answers
101 views

Is it possible to estimate individual rate of inflation for a person as against the avg inflation rate for that country?

Even though normally we all use a specified inflation rate per country for financial calculations (i.e real returns, salary increases, etc..) isn't it possible for the inflation rate to have different ...
4
votes
1answer
1k views

Do net returns on mutual funds include expense ratio?

I'm considering an actively managed bond fund (DODIX) versus an similar index fund (VBMFX). Both are high quality intermediate funds. The 10-year return of DODIX (exp ratio 0.43%) is 0.86% higher than ...
2
votes
3answers
142 views
4
votes
1answer
603 views

How to quantify differences in return with low expense ratio vs high expense ratio mutual funds?

One often repeated piece of financial advice is to work to minimize your expense ratios in your mutual funds in order to maximize your returns. While it is often straightforward to determine the ...
5
votes
1answer
235 views

How to determine desired/required value with “value averaging”?

As opposed to dollar cost averaging (DCA), value averaging (as described in this eHow article) is a technique where the investor determines the value the investment should have after a given time ...
3
votes
3answers
496 views

What is a decent rate of return for investing in the markets?

This article indicates that the average rate of return for stocks is 4% after inflation, fees, and taxes (called "net-net-net" in the article). In the article several investment professionals are ...
6
votes
3answers
2k views

Calculate annualized return on stock with multiple transactions

I understand how to calculate the Annualized return on a stock when I have single purchase ie (principal + gain/principal) ^ (365/days) - 1 but how is it calculated when I have multiple buys and ...
8
votes
4answers
584 views

How to calculate the total return on buying a home?

How to calculate the total return on buying a home, considering things such as : home value down payment constant mortgage payment (going from mostly interests at the beginning to mostly principal ...
6
votes
2answers
1k views

Comparing IRA vs 401K's rate-of-return with dollar cost averaging

I have both an IRA in Vanguard and an old employer's 401k with Fidelity management. I would like to compare the performance between the two accounts over time, in order to determine if I should ...
3
votes
3answers
1k views

How to calculate the rate of return on selling a stock?

How to calculate the rate of return on selling a stock?