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Questions tagged [rate-of-return]

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 off-topic.

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2answers
823 views

Investing/business with other people's money: How does it work?

I have heard of this phrased such as "OPM" -- basically, "other people's money." It's something said that, if you don't have the funds necessary to invest, use someone else's money. What does this ...
4
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4answers
243 views

Why is IRR used as a measurement of an investment's profitability?

I am new to money.SE so please forgive if this question is not in keeping with the norms of the site, and let me know how I can improve it. I have a fundamental question about concept of internal ...
4
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2answers
686 views

Calculating returns on a stock: different ways?

I am comparing two ways of calculating the total return on one stock over time and I would like to know if they both make sense. When would you use one over the other and do they have specific names? ...
0
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1answer
621 views

How are average annual returns calculated on an index fund?

I am trying to understand the average annual returns on this index fund: VFTSX according to its data on Vanguard's Price & Performance page. It shows, under "Average annual returns", the ...
4
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2answers
155 views

Calculator to compare mixed portfolio returns [closed]

I've had my IRA in Betterment for the past 2.5 yrs. Betterment invests in low fee ETF's only and charges 0.15%/yr in fess. They allow the user to manage their portfolio only by changing the ...
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1answer
131 views

How do you calculate the RRR on a portfolio given component returns?

Imagine you invest in the following stocks: $11,600 of A, $7,800 of B, $14,900 of C, and $3,200 of D. The required returns on these stocks are 10.7%, 15.4%, 3.9%, 9.1%, respectively. What is the ...
1
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2answers
169 views

Should monthly return or annualized be used?

If I have an average monthly return on capital of 5%, is it more common to use that number for performance or use the annualized value of 60%? I believe the annualized value is what hedge funds and ...
22
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7answers
5k views

Are Certificates of Deposit worth it compared to investing in the stock market?

Looking at roughly 0.05% for a CD to 5% for a stock portfolio. That's a huge difference in return. For example, with $10K, that's a 4.95 percentage point difference! In general, does a diverse ...
2
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2answers
56 views

Return calculation on a security that you are rebalancing

Suppose you have some security A, and the suppose the following: Initial amount of security bought: 100 Initial price: $10 Suppose after some time: Sold qty: 10 Sold at: 11 Then you buy some ...
4
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2answers
2k views

“Rule of 72” For Higher Multiples?

The rule of 72 states that if I earn n% interest, I can divide 72 by n and get the approximate number of years that I'll double my money. Suppose that I wanted to find out how many years to quadruple ...
1
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1answer
586 views

XIRR not working for this dataset. Any other method to calculate rate of return?

For this particular dataset xirr is not returning any reasonable value either in excel or google spreadsheet. What is the option to calculate the rate of return in cases like this?? Sl-no date ...
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4answers
3k views

Does investing more money into stocks increase chances of profit?

Assume someone wanted to invest in stocks for the sole purpose of profiting as soon as possible. Given the risky nature of stocks, would investing bigger amounts of money increase the chances of more ...
0
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1answer
285 views

When I calculate “internal rate of return (IRR)”, should I include cash balance?

When investing in the stock market, some methods need a cash balance in the broker's account. For example, a new investor has $20,000 to invest. She buys stock worth $10,000. The remaining $10,000 is ...
1
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3answers
776 views

Should I be disappointed with my investment returns?

I put $46,000 in an IRA 10 years ago. I have never made any additional deposits. The value is now $58,000. I feel it should be worth more. All of it is in mutual funds.
3
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3answers
363 views

Accepting high volatility for high long-term returns

According to modern portfolio theory investors can pick a trade-off between expected returns and volatility along a certain curve. If someone is investing for the very long term (decades until ...
3
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1answer
337 views

How to compute real return including expense ratio

I am currently hesitating between 2 similar International Index Fund, FSIVX and FIENX. FSIVX have an expense ratio of 0.12% while FIENX have 0.63%. I can try to compare them side by side on google ...
7
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3answers
4k views

401k compound interest vs other compound interest

Whenever I see the presentations or documents imploring me to invest in 401k and retirement, it always shows a nice graph showing a 7% compound interest and how less money saved earlier in your 20s ...
0
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1answer
232 views

What's the folly with this stock selection strategy

I am very leery of investing in Stocks over here. I have tested some other Asian markets and gotten some returns. Rather than have my money depreciate (less interest than Current Inflation ), I'd ...
2
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2answers
425 views

difference in cagr and irr

I am trying to understand the IRR, XIRR and CAGR functions better. See the link below for my examples. I am looking at a very simple example of 20K invested and 50K returned at the end of an ...
3
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2answers
392 views

Calculate APY revolving loan with offset/staggered payment schedule?

I want to buy a weekly meal ticket, 7 lunches for $7, but do not have $7 today. Lender says, "I will loan you a consecutive series of 5 meal tickets for 5 consecutive weeks (35 consecutive lunches as ...
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1answer
178 views

How do you calculate return on investment for a share of stock?

How do you calculate the return on investment for a single share of stock? For example, what would be the return/value of a single Google share now, if bought in January 2015?
3
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2answers
149 views

Understanding the personalized Rate of Return

In my 403k web site, I saw that my personalized rate of return as 4.25%. To understand it, I clicked the question mark. Your personalized rate of return (PRR) represents the specific performance ...
2
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1answer
62 views

Using Index Returns in Retirement Investment Planning

In retirement planning one of the inputs to a forecast is an assumption about return on investments... and there are a number of rules of thumb thrown around. 6%, 8%, something that goes from higher ...
3
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1answer
120 views

How can “fund performance” and “unit values” go in opposite directions?

I have a "variable annuity" with Lincoln. They have a "historic unit values" page that says fund X increased 40% since the end of last year, to yesterday. And that fund Y increased 23%. But they ...
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1answer
456 views

How to calculate mutual fund return

How do you calculate the annual return of a mutual fund? I understand roughly how mutual funds work, and I'm trying to decide which mutual funds to invest in, but to prove to myself that I understand ...
1
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2answers
125 views

Why compare asset performance using returns, instead of using change factors?

Why do investors compare the returns of assets as opposed to the change factors of assets? E.g. comparing 6% / 4% instead of 106% / 104% to get the comparative performance of two assets. AFAIK ...
7
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1answer
236 views

Why adjust for inflation annually, as opposed to realising it after the holding period?

Why do investors offset their annual returns against inflation, when inflation isn't realised until the end of the holding period (when the investor is actually spending the money)? An example: ...
0
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1answer
48 views

What numbers to look for investment returns

I'm exploring the field of investments and would like to know roughly what numbers and estimates have to be looked at for a company that is going to become public soon. For instance, if I buy 10% of ...
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3answers
324 views

What return are you getting on your money from paying down a mortgage on a rental property?

If you bought a $200,000 rental home with 20% down, what is the return on investment you're earning over the full 30 year period from paying down the loan using the rental income? We will assume the ...
4
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2answers
1k views

How do you calculate the annualised return of your portfolio from the annualised returns of each of your funds?

I've invested in a number of mutual funds, and I've calculated the annualised return of each of them, using a spreadsheet (and the xirr function). I want to calculate the annualised return of the ...
5
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1answer
658 views

Calculating Simple Portfolio Returns with Rebalancing or Adding/Removing Securities

Given a set of portfolio weights, w, and historical security prices, I am looking to calculate a simple portfolio return via: where R is the simple return for a given security from time t to t+1: ...
2
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1answer
340 views

Excel formula for calculating interest rate of earning

On January 1st I invest 1238. I do this every January 1st for 20 years. At the end of 20 years (So December 31st of the 20th year), I have 32880 in the account. What's my rate of interest? By playing ...
2
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1answer
806 views

Can you have a positive return with a balance below cost basis?

I use Fidelity for an investment. Their website says I have a cost basis of $5000.00 invested in FUSVX. Now the balance of this mutual fund (which I believe is simply market value at closing from ...
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2answers
725 views

Cumulative Return between two dates

I have a table that carries data with cumulative return of some instrument. Data is described with start date, end date and cumulative return for date range (start-end): Start Date|End Date |...
1
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1answer
130 views

Looking for an ROI formula, brain is broken today

This is honestly a pretty simple problem, but for whatever reason I am not able to pull it all together. I was talking theoretically with a friend and neither of us can nail down the math so I coming ...
3
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1answer
952 views

Calculating return on a series of stock positions with multiple uneven transactions

How can I calculate the return on a series of stock positions with multiple uneven transactions that I can compare to the equivalent buy and hold return over the same period? Random Example: Starting ...
1
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1answer
6k views

Converting annual interbank rates into monthly rates

I have a time series of the three month interbank rate each month. I suppose that the rate is give annually. I need these interbank rates to be on a monthly basis because I want to us these rate as a ...
2
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1answer
128 views

How is the return rate on index funds calculated?

For example, i was viewing this mid-cap index fund: http://www.bloomberg.com/quote/VMGRX:US It says the annual return is 16.41%. How is that calculated? The index has not risen enough in price over ...
3
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3answers
248 views

Is this Employee Stock Purchase Plan worth it when adding my student loan into the equation?

Here are the details of my company's Employee Stock Purchase Plan: An automatic 5% purchase discount off the fair market value of the stock. Payroll deductions start on July 1st. The stock purchase ...
4
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3answers
613 views

What evidence or research suggests that mid- or small-capitalization stocks should perform better than large caps?

In my 401k I have always allocated a greater percentage of my portfolio into mid cap funds because they seem to be riskier and have a higher upside. Yet, as of the past year or so, the large cap funds ...
0
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0answers
531 views

How to Calculate Annual Return of A Fund When Contribution is Irregular?

I am struggling to calculate the annual return rate for this investment. Initial Investment on 20-May-2010 $2500 Regular contribution of $250 from 12-July-2010 to 10-10-2013. Total units ...
3
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2answers
946 views

A calculator that takes into account portfolio rebalancing? [closed]

I'm looking for a calculator that takes into account rebalancing when estimating total returns using historical data. For example, I'd input the following into the calculator: I have an initial $10,...
0
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1answer
168 views

What type of best bank account to store your savings in?

My wife has saved up quite a bit from a job that she had. We put the money into a BoA savings account, but the returns are miserable. What sort of savings account would you recommend to put these ...
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1answer
3k views

How to incorporate dividends while calculating annual return of a Stock

When we say that the average annualized return of a stock XYZ over the last 5 yrs is 7%, how do we factor in dividends? For example, let us say, if XYZ was at 100$, and at the end of year 1, it was ...
3
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2answers
10k views

irr calculation on stock with dividends

I want to calculate IRR (internal rate of return) for stock purchases. Not sure if I am doing it right, hope some of you might confirm it. Lets say I bought stock JNJ in 2005, 20 shares for $50 each. ...
0
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1answer
258 views

What's best investment option? Mutual fund or Property [duplicate]

I had purchased a home year ago and given it on rent. The rent I'm getting is only 5% of total cost of home while stock fund industry (mutual fund) is paying 20% minumum (reports from my country here ...
0
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2answers
225 views

Comparing historical performance of different accounts

I have several different investment accounts, and I'm trying to compare the historical performance between them. Some of the accounts are easy: I have a couple of different accounts that are invested ...
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1answer
115 views

Incorrect XIRR value of installment loan? [closed]

Using a financial calculator I was able to determine the interest rate of an installment loan with principal of 14975, payments of 444.56 and 60 month term is .2557%. However, when I put the loan ...
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2answers
2k views

Is there any real purpose in purchasing bonds?

I am new to investing, for the most part, and I have learned a decent amount about how bonds work. What I wish to know more of is simple: Is there any real profit to it, and is it worth it? From the ...
3
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0answers
147 views

How is the annual ROI calculated in Peer-to-Peer Investing?

I am currently looking through the data file that is provided for export by the lending club, and I am a little confused on how you would go about calculating the ROI for an investment. Just as an ...