Measuring annual gain, yield, etc

[tomseeley]

I’ve got years of data using FM. I track everything, incl new $ in, $ I take out to spend, all internal gains reinvested (div, int, cap gains, etc), all my RMD withdrawals, fund-to-fund rebalancing xfrs, etc. I summarize it all yearly in an excel file that I’ve kept up since the end of 2009. So I know how much I put in, took out, moved around, etc., every year, plus the net change in the entire portfolio btwn BOY and EOY values because of changes in market values, etc.

But other than calculating the annual avg of each year’s diff btwn this year’s EOY and last year’s EOY values, I don’t know how best to compute avg annual gain, or yield, etc., taking into account all the things I’ve done during the year. So I don’t know how to compare how well I’ve done with public measures like how well the S&P did, or some other benchmark. And more importantly I don’t know how to project how well I might do from now on if the past ten years are any indication (I’m not asking about THAT assumption!).

Clearly, if EOY = BOY, even if I took out $50,000 to live on, the diff btwn EOY and BOY is zero but I obviously didn’t gain zero during the year, or I’d never have been able to take out the 50 thou to spend! Or did I?

What should I be looking at, other than the fact that I’m not running out of money! Which by itself ain’t too shabby, I realize!

[Mark]

Hi tomseeley,

I'd suggest using the Return On Investment (ROI) yield metric. It is both a time and money weighted performance metric. You can run this for any object (investment, asset type, sub-portfolio, etc) for any time period you want. By default, it is reported as average annualized when the yield term is longer than 1 year. You can read more about it in the documentation here:

https://www.fundmanagersoftware.com/hel ... s_roi.html

You can get this ROI yield in many places (Reports, Graphs, Portfolio Editor).

[tomseeley]

Thank you. I do understand IRR, etc., so I appreciate knowing this parameter is a good measure of what I want to know.