SURPRISE!!!!! Our Personal Rate of Return is 11.5% for 2009!

June 3, 2009

I logged into my wife’s 401(k) account this morning to find this:

Personal Rate of Return

The definition of personal rate of return (I put together a tutorial here) on Fidelity’s website is:

Your Personal Rate of Return is calculated with a time-weighted formula, widely used by financial analysts to calculate investment earnings. The calculated value reflects the result of your investment selections as well as any activity in the plan accounts shown. Other personal rate of return formulas may yield different results. Remember, past performance is no guarantee of future results.

That explains why our personal rate of return looks so good. For one, we increased our contribution amount AFTER the carnage of January and February. Two, the company’s profit-sharing contribution was also deposited in March, missing the bad months of January and February. In other words, our number could look much worse.

My point?


Invest regularly and forget about it! Have your allocation plan set up and STICK TO IT! Don’t worry about the news. If your 401(k) balance is going to bug you, DON’T LOOK AT IT! The worst thing you can do is allow your emotions to take control. Decisions made on emotion almost never work out.

Okay, that’s it. Carry on…

10 responses to SURPRISE!!!!! Our Personal Rate of Return is 11.5% for 2009!

  1. Your posting provided impetus for me to check my PRR for my 401k accounts. I was pleased to see one at 14.8% and the other at 14.5% for the year thus far. Made my day (I'll enjoy the euphoria by trying to ignore the pummeling they underwent last year, though).

  2. I calculate my own ROR and at my new job in the 401k I'm up 41.02% since the account opened in Oct '08. I count all the money that I did not put in myself towards gains. So my personal ROR is current value divided by the sum of my deferrals.

    • @PK: Sounds like you are including your employer's matching contributions in your ROR calculations. Fidelity, which JLP uses, does not include the employer's contribution in your personal ROR calculation.

      If your employer is matching your contributions dollar-for-dollar, then based on your methodology, you should have a 100% ROR (if invested in cash) :(

  3. @JLP: Nice job at timing the market! What kind of plan do you have that says to increase savings rates in March?

  4. The built-in calculator at Great West mostly agrees with me too!

  5. Wow – I just checked my Fidelity 401k and it has a 9.2% rate of return for the same time period.

  6. @jadem @JLP – I usually ignore mine too, but mine is up 11.64%. Minor victory for us staying the course!

  7. My personal rate of return was 6.2 because I rebalance this year. I feel good because it was not negative like most

  8. Be very careful with Personal Rate of Return. Fidelity’s reporting mechanism is Daily Arithmetic Mean. (see

    Let me give you an example.

    Personal Rate of Return from 01/01/2009 to 08/18/2009 is 6.2%

    Your Contributions $540.50
    Investment Return -$0.82
    Current Balance as of 08/18/2009 $539.68

    Somehow I’m losing money but yet my rate of return is 6.2%. Anyone see a problem here?!

  9. mine is 22.6% for 2k9 ytd