Fun Math: How to Calculate Returns Using Monthly Data

Do you know how to calculate the year-to-date return on the S&P 500 Index using monthly returns?


Well, it’s easy and fun and I’ll show you how. There may be another way to do this but this is the way I know how to do it.

First off, we need the monthly returns for the S&P 500 Index for 2007, which can be found here (download from the Standard and Poor’s website). To make things easy, I summarized the information in this graphic:

Next, we need to convert each month’s return to a decimal and add 1 to each one to get the factor (I believe that’s the word I’m looking for). So, it looks like this:

Finally, to get the year-to-date return of the S&P 500 Index, you simply find the product for the entire set of factors like this:

1.0151 × .9804 × 1.10112 × … &#61 1.0913

This step is very easy to do if you use Excel. Simply use the Product function. Or, if you are interested, you can download the simple spreadsheet I put together for this example.

Anyway, to get the YTD return subtract 1 from 1.0913 and multiply by 100 to get 9.13%, which is the exact number that S&P has on their website:

Pretty cool, isn’t it? Just make sure you have the date entered correctly. I used the returns through September.

On last thing: sometimes your numbers may not match up exactly. This is most likely due to rounding.

Now, isn’t math FUN?

23 thoughts on “Fun Math: How to Calculate Returns Using Monthly Data”

  1. This is why they put up these #’s for us. Saves me time so I don’t have to mess with functions in Excel.

  2. Still, Tyler, this is a good skill to have if you’re active in your financial business. The desired number is not always posted and it would be good to be able to find it yourself.

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  5. I use another way to calculate YTD. It makes more sense to me.. See if this helps others also.
    Let the index value ( amount) on 1 Jan be 100..
    Now, add 1.51% to 100 , so closing = 101.51…
    This way caculate for Feb till Sep as below:-

    Month Amt.(Op.) Amt(closing.)
    Jan 100 1.51% 101.51
    Feb 101.51 -1.96% 99.520404
    Mar 99.520404 1.12% 100.6350325
    Apr 100.6350325 4.43% 105.0931645
    May 105.0931645 3.49% 108.7609159
    Jun 108.7609159 -1.66% 106.9554847
    Jul 106.9554847 -3.10% 103.6398647
    Aug 103.6398647 1.50% 105.1944626
    Sep 105.1944626 3.74% 109.1287355

    YTD= (closing-opening )/ opening*100
    = (109.128-100)/100*100
    = 9.128

  6. Jatin’s clarification for
    July 30th, 2008 at 3:49 am

    god… I cant paste HTML format here…
    nobody can understand what i wrote on July 30th, 2008 at 3:49 am here.

    all i have done is
    Jan:- 100…..*1.51 = 101.51
    Feb:- 100.51..*-(1.96%) = 99.5204

    and so on upto Sep

    .Anyways.. if someone really wants it in excel, then mail me

  7. clarification for jatin Says:
    July 30th, 2008 at 3:49 am

    since HTML formatiting is not here , so my earlier calculation looks horrible and senseless.

    i will try to explain.. all i have done is this…

    for Jan , 100*1.51= 101.51
    for Feb ,101.51*-1.96= 99.5204

    and go on till sep

    Sep closing is 109.128

    YTD= (closing-opening )/ opening*100
    = (109.128-100)/100*100
    = 9.128

  8. hi could you please calculated for me the s&p 500 for the las 15 years on your worksheet.say from 1/1/1993 to 9/30/2008. thanks very much great worksheet.

  9. I used your method on each of the funds in my portfolio for YTD 2008 (thru 10/31/08). The results I got exactly matched the YTD values published in WSJ and on the Fidelity and Vanguard websites. That surprised me, since I had made major transfers during June (greatly reducing the amounts in stock-based funds). Thus, I expected my personal rate of return in those funds to be different from the published returns. Am I doing something wrong, or is the method wrong for my situation?

  10. I used your method to calculate YTD return (thru 10/31/08) for each of the mutual funds in my portfolio. I expected my personal return on each of the funds to be different from published numbers, since I had done major transfers between funds in June. Instead, to my surprise, the numbers I calculated were identically the same as the published numbers. Why? Should I use a different method to compute my personal returns?

    BTW, for those who do not have access to the =Product() function in Excel, an alternate method is to take the natural log of each of the monthly factors, sum the natural log values, and then take the exponent of the sum. In MS Works, the formula would be =exp(sum(B2:B13))-1, where B2:B13 contains the natural log values of the monthly factors.

  11. I’ve used the method for a while but I can’t justify how the growth figures(%) of a couple of months can be used to represent the growth for an entire year (YTD)?

    So if ur fund started in March, then at the end of month, the growth for March and YTD are the same!? Then you carry on doing so for each coming months as in, YTD = (1+r_Mar)*(1+r_Apr)*…-1

    Any comments on that? thanks.

  12. Does anyone have a simple method for a monthly performance calculations which includes dividends?

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