How do I calculate my performance across all accounts?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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milo
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How do I calculate my performance across all accounts?

Post by milo »

This is an easy one for you experts.
How do I calculate my performance across all accounts?
I can the calculate rate of return for 1 account by using various methods. I use
Time-Weighted Rate of Return from here

https://www.pwlcapital.com/pwl/media/pw ... linked.pdf
for example
my non-registered from bankA 7%
my non-registered from bankB 12%
my registered from bankA 3%

whats my total rate of return across all accounts?
all accounts have very different account balances, so i dont think adding them and divide by 3 would make sense.
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Re: How do I calculate my performance across all accounts?

Post by longinvest »

Here's a related topic: Investment Performance Spreadsheet

The linked spreadsheet calculates returns across accounts.
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milo
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Re: How do I calculate my performance across all accounts?

Post by milo »

Thank you for the link.
I can see how its being done.
However, I wonder if there is a way to get the performance across all accounts, given performances of individual accounts.
I guess not. :(
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Re: How do I calculate my performance across all accounts?

Post by IdOp »

milo wrote: 19 Dec 2017 18:36However, I wonder if there is a way to get the performance across all accounts, given performances of individual accounts.
I guess not. :(
I think you're right that there's no "holy grail" of this kind. For example consider your preferred method of time-weighted return. For it in general, the overall portfolio return depends on information, such as the overall portfolio value at the time of a cash flow, which isn't reflected in any of the sub-portfolio returns. So one can't expect that the sub-portfolio returns can somehow be combined to reproduce the overall return.

For IRR, I think we can say that if all of the sub-portfolio returns happen to be the same, then the overall return will also be that value. (A peanut-sized result. :) )
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Re: How do I calculate my performance across all accounts?

Post by MikeFreedom49? »

I've modified an older version of the linked spreadsheet a few years ago, before it had multiple accounts and had other changes made to it. I basically did something similar, except I had the return calculations for each account, subtotal for my portfolio, another to sub total my wife's portfolio, as a final one the overall combined portfolio. This way I could track all of our investment and pension accounts and have return information for each.

You can do the same thing, take a copy of the spreadsheet and add more calculation sheets. You'll also have to modify the returns sheet to add in columns for the new calculation sheets. So in my spreadsheet there is a account sheet and a calculation sheet for each account, my portfolio, my wife's portfolio and another for the combined portfolio.
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Re: How do I calculate my performance across all accounts?

Post by Insomniac »

I use the simple Dietz method to calculate the rate of return for the accounts and then use the weighted average to get the total portfolio return. I know it's not accurate, but I don't care. Why am I doing this? Why do I care if my rate of return is 4%, or 6% or 10% or -5%? I'm not going to change my investment policy if I have a good year or a bad year. I do care about my asset allocation and will adjust the portfolio accordingly (e.g. this year equities did well and I'm now a couple of % off my target allocation, so I will be buying fixed income in the new year). Of course, if the markets suck and I have a bad year, I may have to adjust my spending. This adjustment would probably based on the value of the portfolio lost, not on the rate of return. So gain/loss in dollars is more important than rate of return.

I have used the same method for the last 7 years so I am consistent. It's somewhat interesting to see that in some years the rate of return has been better or worse than other years. It's looking back so it really doesn't matter and accuracy is not important.
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Re: How do I calculate my performance across all accounts?

Post by longinvest »

Insomniac wrote: 23 Dec 2017 00:21 Why am I doing this? Why do I care if my rate of return is 4%, or 6% or 10% or -5%?
That's the question, isn't it?

I use the personal performance spreadsheet to compare the time-weighted performance of my portfolio with that of its benchmark. My discount broker doesn't provide me with the time-weighted performance of my portfolio across accounts.

In other words, the spreadsheet allows me to calculate my portfolio's tracking error considering all of its real-life hurdles such as transactions costs, bid-ask spreads, and imperfect rebalancing.

This is not of huge utility, but it allows me to assess that nothing is wrong; that I didn't screw up my rebalancing or something. It helps me sleep better at night, regardless of the portfolio's actual performance (highly positive, highly negative, or, as usual, just plain boring), as long as the tracking error stays small.
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