How do you calculate your annualized returns?

[SnarkyPuppy]

There's a few threads on this previously, but there's never been a comprehensive agreement on the most practical approach to go about this. 

 

I'm trying to guage if a simple XIRR calculation is sufficient for determining what my track record is.  An example as follows:

- Beginning Period Date and Balance

- Deposits and Date of Each Deposit

+ Withdrawals and Date of Each Withdraw

+ Ending Period Date and Balance

=xirr(values, dates)

 

How do each of you track performance?  I think it's also important to translate these values into a normalized unit for purposes of comparing to a passive portfolio, but I haven't tackled that yet.

 

[Travis Wiedower]

Interactive Brokers has good tools for this. Does your broker not?

[SnarkyPuppy]

I have multiple brokerage accounts which make it more difficult.  Etrade has the option but I don't see it for Fidelity.  I would use IB except I'm restricted in which brokerages I can use (job restriction)

[John Hjorth]

SnarkyPuppy,

 

Howard Marks wrote a very good memo back in 2006 about measuring portfolio performance.

[bbarberayr]

Great web site on XIRR - http://www.financialwisdomforum.org/gummy-stuff/XIRR-stuff.htm

 

I agree you need to do this yourself in a spreadsheet to be accurate and not use the broker sites.  In my opinion, XIRR is the best way of doing this.

[BG2008]

XIRR is the best tool in Excel