Annualised growth rate

ozaz

Hello,

I wonder if someone could explain to me how to calculate annualized growth rate of an investment portfolio based on deposits and withdrawals at various dates, and current value?

Below, I've placed a made-up example entered into an Excel spreadsheet.

Would very much appreciate a demonstration of how to do it in Excel (Excel formula to enter into cell B12), or how to do it manually.



Many thanks!

masonic

A few different ways to achieve this our outlined here: https://monevator.com/how-to-unitize-your-portfolio/

dividendhero

Search the interwebnet for "Average Annual Growth Rate (AAGR) and Compound Annual Growth Rate (CAGR) in excel", this functionality is built into Excel

skitskut

List all the cashflow in column B.

01/05/2017 1000
09/12/2017 -300
03/06/2018 5000
01/01/2019 -1000
16/03/2019 -5100


Use the formula =XIRR(B2:B6,A2:a6) for annualised return (7.63%)

bowlhead99

skitskut wrote: »

List all the cashflow in column B.

01/05/2017 1000
09/12/2017 -300
03/06/2018 5000
01/01/2019 -1000
16/03/2019 -5100


Use the formula =XIRR(B2:B6,A2:a6) for annualised return (7.63%)

Wouldn't the payments out of your pocket (eg the 1000 out in may 2017) need to be put as negatives and the returns to you (eg. the 300 in December 2017 and the 5100 you'll get back at the end) put as positives? Usually you have to have the first transaction be an 'outflow' to make it work.

skitskut

bowlhead99 wrote: »

Wouldn't the payments out of your pocket (eg the 1000 out in may 2017) need to be put as negatives and the returns to you (eg. the 300 in December 2017 and the 5100 you'll get back at the end) put as positives? Usually you have to have the first transaction be an 'outflow' to make it work.

You can do it either way round as long as you're consistent.

ozaz

Thanks all, very helpful.

Especially the XIRR example and the Monevator article.