Your Portfolio Results - Quick, Simple, and Easy

I have to apologize to the board, and the people involved. I was so preoccupied with other issues the last couple of days that I let a thread go on for 15 posts or more, with people struggling to understand how to calculate their portfolio returns to allow for money added or removed from the investing portfolio.

The method I recommended in the Knowledgebase is so incredibly simple, logical, and easy to understand that it will take you just a single read through to understand completely. It’s trivially easy to use. Here it is. Again, I’m sorry I was so preoccupied with other things and didn’t give it to Jim and to you all earlier. And please read the Knowledgebase!

And this is OT, so please email me off-board if you have any questions or comments.


Calculating Portfolio Returns

Here’s how to calculate your overall returns ignoring cash flow in or out. Say you start the year with $14,000. You want to equate that with 100% and calculate gains and losses from there. So you ask yourself “What number (factor) would I multiply $14,000 by to get 100?”

By simple arithmetic we have 14000 x F = 100

And thus F = 100/14000 = .0071428

Sure enough 14,000 x .0071428 = 100

Now say three weeks later you have $14,740 and you want to see how you are doing, you multiply that number by .0071428 and you get 105.3 (so you are up 5.3%). If you don’t add or subtract money, that factor will work for the whole year.

Now say you add $2300 of fresh money, but you don’t want that to screw up your estimate of how well you are doing.

You add the $2300 to the $14,740 and get $17,040 which is your new balance that you are investing with. That’s your new starting point. It doesn’t affect how you’ve done up to here. You haven’t suddenly done better because you added money. You can’t still multiply by .0071428 because you’d get 121.7 and it would look as if you were up 21.7%, when you are really only up 5.3%.

So you need to change your factor to make it smaller so it will still reflect just the 5.3% gain you’ve made so far. You figure: “What would I multiply my new balance ($17,040) by to get 105.3, to reflect my 5.3% gain so far this year?”

F x 17,040 = 105.3

F = 105.3/17,040 = .0061795

And that’s your new factor. If you multiply it by 17,040, sure enough you get 105.3. Now you continue to see how you will do for the rest of the year.

If a little later you are at $18,000, you multiply 18,000 by .0061795 and you get 111.2, so you know that your investing is now up 11.2% for the year.

Same, if you take money out. You don’t want it to look as if you lost money. You calculate a new factor so you start from the same percentage where you were.

On January 1st of the next year, you write down how you did for the year to keep a record, and start over at 100 for the next year.

That’s all it is. Simple as that.



I’m in the opposite position of most of you…I’m retired and I take OUT money pretty frequently.

How do I calculate returns? Easy…it’s not accurate, but it’s easy:

Here’s what I’ve done so far this year:

So far, it’s end of March for month-end calculations. Going by this approach, my actual portfolio is (normalized to $1000 base):

Starting amount January 1st: $1000
End of March: $1425
Total Return (Not counting withdrawals): 42.5%
Amount withdrawn: ~3.5%

Inaccurately, I could say I had a return of 46% Jan-Mar (42.5+3.5), but that does not consider the drag of withdrawing money that otherwise would be generating a return AFTER I withdrew two lump sums in the Jan-Mar period.

Yeah, there are more elegant, more accurate approaches. But why bother? I know that I’m up a nice amount and does it matter if the above calculation is off by a percent or two? Not to me although I recognize that it matters to some. In any case, if I’m consistent in my approach I get a means of comparing returns in various years.

The balance will be brutalized for end of April because I withdrew a LOT for taxes (big IRA distribution for new house in 2019…and I didn’t have enough withheld) and so my total amount withdrawn to date is now 9.5% YTD by end of April. Total 2019 withdrawal will be somewhere around 15% or so… a bit high, no? Good thing I get good returns…

Side note: While I am using some options (buying calls and selling puts), they are a minor percentage of the total portfolio.

And…as another side note, here is my portfolio (roughly):

TTD      24.4%
**CASH**      9.3
NFLX      9.1
TWLO      8.9
AYX       7.9
STNE      7.6
ANET      7.3
MDB       6.3
AMZN      5.6
XXXX      3.5 (I'm looking to perform an option play unfamiliar to me here so that's why its unidentified)
OKTA      3.0
SQ        2.4

Various other small amounts after SQ.

Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.


Please, no other replies on this thread. Saul has been nice enough to show us how this is done, even though it doesn’t relate to finding growth companies. Let’s thank him by leaving it at that.

Board Deputy