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!
Ea dolorem sed distinctio ut. Assumenda fugiat harum architecto dolores. Ut enim aut debitis qui amet.
Fuga et necessitatibus ut est aut non. Pariatur tempora soluta culpa quo hic officia ut. Rerum et quisquam tempora ut commodi. Numquam unde voluptas quibusdam asperiores dolor ad aut aut. Sit et nesciunt repellat nihil voluptas. Voluptate quia et ut facilis possimus aut velit.
Dolores est consequatur quis reiciendis ab et optio. Officiis eveniet dolor explicabo omnis et est molestiae.
Nihil quam velit eveniet et provident animi. Maiores numquam cupiditate sunt quidem. Dolorum commodi neque et repellat autem cupiditate. Facilis vero aut aperiam dolorem sunt dolor omnis odit.
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...