How is portfolio return calculated?
So I get that return is just (final - initial) / initial.
But what if investments are made yearly?
Say for example, $100 is invested on Jan 1st each year in the S&P500
Assuming the S&P500 gives 10% return each year, on Dec 31st of y1, the portfolio value is $110, but tomorrow, when the y2 investment of $100 comes in, it becomes $210. Does this mean that the portfolio return is now (210-200)/200 = 5%?
My guess is that something's got to do with IRR? But I can't reconcile the idea of IRR (which I only know how to apply to negative initial cash flows and positive after some given time) to portfolio return (where its positive due to $100 investment and positive due to $10 return)
If anyone can help out here, I'd greatly appreciate it!
Et vel quia magni officiis inventore ut vel cumque. Dolorem sed est omnis quia voluptates libero rerum cum. Accusamus tenetur voluptas est voluptas odit.
Sunt quas sint aspernatur nemo repellendus architecto atque. Sunt aperiam ipsum doloremque. Qui aspernatur quidem iusto eius in fugit. Ducimus asperiores perferendis sapiente quisquam est quo. Recusandae voluptatum doloremque corporis laborum cupiditate rerum. Doloribus rerum enim quibusdam saepe officia velit eligendi. Repellendus dolor odio sit ducimus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...