Estimate Your 2011 Portfolio Rate of Return – Calculator
Some of you may be wondering how well your specific portfolio performed last year. Let’s say you started the year with $10,000 and put in another $5,000 throughout the year, and ended up with $16,000. What was your rate of return? Your main goal is simply to separate the effect of new deposits (or withdrawals) and your actual return from investments.
Figuring out your exact personal rate of return requires you to know the exact dates of all your deposits and withdrawals, along with a financial calculator or software program with an IRR function. However, for an simple and quick estimate of your returns, try this calculator instead:
Instructions
- Get your initial balance. This is probably from your brokerage statements. Try January of last year.
- Tally up any deposits or withdrawals. For example, maybe you put $3,000 in your Roth IRA and also put in 5% of your $40,000 salary into a 401(k). That would be $3,000 + $2,000 = $5,000. If you paid a lot in fees or commissions, include those. No need to worry about the dates.
- Get your final balance. Your December statement is probably available already.
- Find the time elapsed (in years) between your initial and final balances.
- Hit Calculate. An estimate of your annualized return is instantly given.
How Good Is This Estimate?
The calculator assumes that the inflows and outflows are spread evenly around the middle of the year. I originally saw this method in The Four Pillars of Investing (review). However, unless the deposits and withdrawals are very large as compared to the initial balance, the estimates are actually pretty good.
For example, let’s say that you start with $100,000 on 1/1/11, and end up with $120,000 on 1/1/11. If you had net deposits of $10,000 during the year, the calculator above would estimate your return at 9.52%. If the $10,000 was actually deposited all at once on one of these specific days, you would get the following exact returns:
| Deposit Date | Exact Return |
| 1/1/11 (very first day) | 9.1% |
| 6/04/11 (middle of the year) | 9.5% |
| 1/1/12 (very last day) | 10% |
| Estimate | 9.5% |
I Want Exact Numbers Too!
For everything you ever wanted to know about rate of return and then some, see Gummy Stuff. I must warn you that it’s very math intensive. If you just want to know how to figure out the numbers, see his XIRR page. You’ll need the exact dates of all your fees, commissions, deposits, and withdrawals.
Like this tool? Check out the rest of my Tools and Calculators. I hope they are useful.
Updated and revised for 2012.
By Jonathan Ping | Investing, Tools & Calculators | 1/11/12, 11:52pm
January 9th, 2007 at 5:08 pm
Great tool. Thanks for the information.
January 9th, 2007 at 9:19 pm
Could you add 12 more fields, one for a deposit each month instead of a deposit for the entire year? And then weight them accordingly?
January 10th, 2007 at 6:59 am
I think this is a great little tool. Thanks Jonathan.
January 10th, 2007 at 12:16 pm
My Fidelity statement says my personal rate of return is 12.4%, your calculator says 14.82%, not bad. Thanks!
August 28th, 2008 at 5:01 am
[...] Your Portfolio’s Rate of Return – Estimation Calculator When trying to figure out your portfolio’s performance, don’t just trust the performance stats of your mutual fund or that number on your statement. Calculate it independently using this simple calculator. It gives surprisingly good estimates. [...]
April 14th, 2010 at 3:01 pm
Thank you for this simple calculator! I tried some others but didnt’ have the right tools.
June 22nd, 2011 at 10:58 am
[...] Estimate Your Portfolio’s Rate of Return (Calculator) – Even an estimate can be pretty helpful. [...]
January 12th, 2012 at 4:45 am
Thanks! My portfolio came out as -0.99% for 2011 using your calculator.
As a benchmark, the weighted return of my target portfolio using Vanguard index fund returns as proxies for each asset class was -0.79%, so I didn’t do too badly I guess.
Bad years, they happen. At least it’s not 2008.
January 12th, 2012 at 7:12 am
I will have to try this. I’m a bit of a mathphobe, but this seems pretty easy.
My question is, why can’t the mutual fund companies provide this to their customers? They seem able to customize everything else, and i don’t think this would be too much more trouble unless they just want to disguise actual returns
January 12th, 2012 at 8:15 am
Jonathan,
What has your personal IRR on your investments been?
January 12th, 2012 at 1:12 pm
Well, if I did this right, my Vanguard portfolio earned 3.1% while my T. Rowe price portfolio got -1.49%.
I think that makes sense, as my T. Rowe Price portfolio consists of just 2 funds and the bulk of them are in an Int’l Fund that’s really tanked this year
January 12th, 2012 at 1:43 pm
If I’m reading the vanguard numbers correctly, i think the main reason my overall Vanguard portfolio returned over 3% is becus i Hhve $30,000 in Vanguard TIPS, which returned over 13% this year.
Could it be I did something right for once??
January 12th, 2012 at 2:03 pm
@Jeff – My IRR is in the low single digits, here’s my Jan 2012 portfolio update:
http://www.mymoneyblog.com/inv.....-2011.html
@fern – Vanguard does provide personal rate of return on their website somewhere, but I don’t recall seeing on statements. Fidelity also provides personal rate of return both on statements and online, last I remember. Wife’s 401k provider does so also, but most stock-centric brokers seem not to.
TIPS and bonds in general definitely saved my return from being negative in 2011.
January 13th, 2012 at 7:30 am
This is a great way to see how your employer match helps you. If I include my true personal contributions only (i.e. the amount deducted from my paychecks, not including my employer match), my return for the year was 35%. My investments’ actual return? -9%.
That’s a tremendous swing… Make sure you’re maxing out your company’s 401(k) match!!!
February 12th, 2012 at 10:19 am
Thanks for a great calculator, Jonathan! In which fields should commissions for sales and purchases go? Logically, I would have thought in the withdrawals section, but I’m not sure that’s right?
May 17th, 2012 at 9:06 am
Using your calculator, if I begin with $10,000, deposit 1000 and withdraw $1,000 and ending balance is $10,000 it give me (18.18%). Why is it not a 0% return?
Thanks,
Chris
May 17th, 2012 at 10:42 am
@Chris Ely – It does show a 0% return for me using those numbers.
May 17th, 2012 at 10:49 am
@Chris Ely – If you began with $10,000, deposited $2,000, and then still only ended up with $10,000 after 1 year, that would result in an estimated -18.18% return.