How to calculate ROI, accounting for money added or subtracted.

I trade from an account. Sometimes I withdraw from it to pay an expense. Sometimes I add new savings. How do I calculate performance (ROI) on that account?

 

Two methods:

time weighted returns
money weighted returns.

Research them and figure out which one is appropriate given the withdrawal and deposit timings and amounts.

 

Do your calculation like a mutual fund. They have adds/withdrawals daily.

1. Calculate your starting capital as though it's "shares/units". That is, if your account is $100,000, you could say that's "1000 units x $100/unit".

(2) Each time you add or withdraw funds, recalculate the "unit value". Your ROI will be the change in unit value over time.

 

Thank you. Money-weighted (IRR) is more appropriate because I am an individual investor wanting an annual report card for my account.

 

This spread sheet should help.

 

That spreadsheet sounds great, but it must be from a version of Excel too new for my Excel 2003 to open. Could you save it as an older version and re-post it?

 

The attached file should work with Excel 2003.

 

Just what I needed, thanks.