# Calculating Portfolio Return

I am doing a research on the proper ways to calculate portfolio returns.

The condition: The underlying asset is physical gold bars. Just gold, purchased from 1 particular seller.

Currently i have two approaches. Consider the following:

## 04/06 10gr \$90 \$900

Assumption: Today's sell price is \$115

The first method would be calculating as follows:

1. I calculate all the money i've spent to purchase gold in the past i.e. (\$1000 + \$1100 + \$1200 + \$900 = \$4200).

Then I find out the value of my gold using today's sell price i.e. ((10gr + 10gr + 10gr +10gr)* \$1050 = \$4600).

Finally, i calculate the return of my investment using the following formula

(present value - past value)/past value, i.e. (4600-4200)/4200 = 0.095

OR

I found this method here https://financetrain.com/how-to-calculate-portfolio-returns/

Which essentially taking into consideration the weight and the return of each time i "top up" my investment.

I would like to know which methodology is preferable and why ? (or perhaps there's a better approach to this).

Edit I tried both approaches and end up with similar result. Now i just need to find a justification why 1 methodology is preferable compare to the other.