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Figuring Your Personal Rate of Return
By JLP | January 2, 2007
The Finance Buff has a very interesting post that details a simple formula that you can use to estimate your personal rate of return. I blogged about this very topic last year but my formula was incredibly detailed and would be a major pain for most people to use. To compute FB’s formula, the only information you need is:
1. The beginning balance
2. Net amount invested or deposited into the account
3. The ending balance
I’m not one to steal other people’s content, so you’ll have to head over to FB’s blog for a great example of how the formula works.
No, it probably isn’t totally accurate, but it will do a great job of giving you an idea of how you did. In fact, I ran the numbers on my wife’s 401(k) and came up with a personal rate of return of 17.3%, which is VERY CLOSE to the 17.2% that Fidelity reports. Pretty cool!
Topics: 401(k), Investing, Personal Rate of Return | 1 Comment »
January 3rd, 2007 at 10:17 pm
Thank you JLP for the mention!