How to measure your Portfolio Returns?

It is important to measure your portfolio return at least once a year and compare against that of market average which is represented by SPX. If it is actively managed, i.e, by a mutual fund or a financial advisor, it should perform at least in par with the market average. If not, you should seriously consider making a change. Here is the formula to calculate total return. Compare this against the returns of of SPX for the same exact dates.

Total Return R = {(Pc/Po)exponential (1/N)} -1

where

Po = Original Principal

Pc = Current Principal

N = time in years

Example:

Po = 100,000

Pc = 180,000

N = 6 years

R = {(180000/100000)exponential(1/6)}-1 = 1.103-1 = .103 = 10.3%

Couple things to remember:

1. It has to be for the whole account, not partial assets.

2. If you have added or withdrawn funds, then it needs to be calculated little differently, Contact us, we can help you.