How do I calculate CAGR when there are periodic additional investm
 

I have an investment portfolio and I receive periodic valuation reports. I
want to be able to compare performance to other indices. I belive CAGR is
the best approach.

However, since I have made a number of additional investments over time
(i.e. increased the investment capital), I don't know how to calculate the
overall CAGR.
Is there a "simple" way to do this?

Yes, use XIRR. Just give it the cash flows and their dates, it will
calculate the annual rate.

--
Regards,
Fred
Please reply to newsgroup, not e-mail


"Roger Phillips" <Roger wrote in message
...
I have an investment portfolio and I receive periodic valuation reports. I
want to be able to compare performance to other indices. I belive CAGR is
the best approach.

However, since I have made a number of additional investments over time
(i.e. increased the investment capital), I don't know how to calculate the
overall CAGR.
Is there a "simple" way to do this?

Thanks Fred. However, I'm not sure that the XIRR function matches my needs.
I feel that it needs a third set of values for "final values".
As an example, my "input" would look something like:
on 1 Jan 01, I invested $10,000.
By 1 Jul 02, it was worth $11,200 and I invested a further $5,000
By 1 Apr 03, it was worth $15,600 and I withdrew $2,000
At as today (1 Mar 05) the account is worth $17,000
What is the CAGR?

I'm not sure how to apply XIRR to this scenario. Any help greatly
appreciated!
Thanks

"Fred Smith" wrote:

Yes, use XIRR. Just give it the cash flows and their dates, it will
calculate the annual rate.

--
Regards,
Fred
Please reply to newsgroup, not e-mail


"Roger Phillips" <Roger wrote in message
...
I have an investment portfolio and I receive periodic valuation reports. I
want to be able to compare performance to other indices. I belive CAGR is
the best approach.

However, since I have made a number of additional investments over time
(i.e. increased the investment capital), I don't know how to calculate the
overall CAGR.
Is there a "simple" way to do this?

What you are calculating is your return if you sold the investment today. So
that's what you feed XIRR. The final cash flow is the (negative) value of
the account, just as if you had liquidated it that day.

--
Regards,
Fred
Please reply to newsgroup, not e-mail


"Roger Phillips" wrote in message
...
Thanks Fred. However, I'm not sure that the XIRR function matches my
needs.
I feel that it needs a third set of values for "final values".
As an example, my "input" would look something like:
on 1 Jan 01, I invested $10,000.
By 1 Jul 02, it was worth $11,200 and I invested a further $5,000
By 1 Apr 03, it was worth $15,600 and I withdrew $2,000
At as today (1 Mar 05) the account is worth $17,000
What is the CAGR?

I'm not sure how to apply XIRR to this scenario. Any help greatly
appreciated!
Thanks

"Fred Smith" wrote:

Yes, use XIRR. Just give it the cash flows and their dates, it will
calculate the annual rate.

--
Regards,
Fred
Please reply to newsgroup, not e-mail


"Roger Phillips" <Roger wrote in
message
...
I have an investment portfolio and I receive periodic valuation reports.
I
want to be able to compare performance to other indices. I belive CAGR
is
the best approach.

However, since I have made a number of additional investments over time
(i.e. increased the investment capital), I don't know how to calculate
the
overall CAGR.
Is there a "simple" way to do this?