How to check my portfolio’s performance

I was wondering which of the following parameters best shows the performance of a portfolio:

  • Simple rate of return (SRR)

  • Internal Rate of Return (IRR) = Money weighted Rate of Return (MWR) = Dollar weighted Rate of Return (DWR)

  • Time weighted Rate of Return (TWR)

I guess it depends which investor / what investment. I suppose most of us already started investing and are still investing more cash in a more or less regular basis.
So that mean i want to give weight in the analysis to the amount of cash i regularly invest (more saving = more cash invested= is better) and the performance of the product (VT, Viac etc).

So SRR?
What do you mean?

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I also have issues understanding how to calculate it.
At the moment, I even have a google sheet that show the returns of every single time I bought something.
I did check the Time Weighted of IB but it was weird and I keep forgetting how it’s calculated. I think at some point it was positive while the market and my etf were negative.

First thing first: i buy & hold only VT / VIAC and will keep on doing so for decades, along the way will ad bonds. So analyzing my portfolio is just iut of curiosity/ interest, not investing strategy.

Until now i did not look at the performance, so i try to figure out how to do it now.

I guess SRR to get picture of my wealth over time and TWR to see how my investment is doing. I do not completely understand IRR, but it seems to be a way to include the market timing skills…so i don’t care about that.

Let’s say i want to check yearly my portfolio performance:

  • SRR allows me to see how my wealth performed (cash invested + market performance)
  • TWR allows me to see the market petformance only

Source:

But reading the following source, looks like IRR is the best to analyze overall:
https://www.merriman.com/investing-101/performance-time-weighted-return-vs-internal-rate-of-return/

:roll_eyes::roll_eyes:. Would love to know what you guys think about it.

Edit:
Best summary so far:
https://www.bogleheads.org/wiki/Calculating_personal_returns

So i guess:
IRR to have a look at the evolution of my global portfolio and TWR to have a look at the evolution of my investment product (and eventually compare it against benchmark). So no SRR.

So far I have kept it simple and used - I suppose what you call - the SRR (just calculated total present value vs. total money in).
But I don’t observe it too much (although it’s curious to see CHF vs. USD sides of it).
I apply the same criteria for individual holdings, however mostly just to do some nice plots, and perhaps rebalancing.

I use the built in IB comparison (TWR I believe) to check performance vs. benchmarks.

But an interesting topic, will revisit my approach as I learn from the discussion here. :slight_smile:

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TWR is interesting for portfolio managers. It shows how good the investment was compared to the market. There is no point in TWR if you are aiming for market returns in the 1st place.

MWR accounts for contributions and deductions. It shows what your real return was. IRR/XIRR function in Excel will give you the result.

Let’s assume the world stock market returned 12% in 2019. TWR will show you 12%. MWR will also show you 12% if you invested everything on January 1st that year. But if you invested on a monthly basis, MWR will show you the real picture (something closer to 6%).

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@yakari you might want to check Porfolio Performance (https://www.portfolio-performance.info/) which has some charts and metrics in order to have an overview of your portfolio. I just started this week-end to try it out so I can’t tell you much about it but at least it has metrics such as:

  • True Time-Weighted Rate of Return (TTWRR)
  • Internal Rate of Return

I am exactly in your case where I am trying to figure out how my portfolio is doing. But right now I have to finish to book all my orders and trades into that software which takes more time than I thought…

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I also started with it. Now i am trying to understand the data showed :crazy_face:

So i entered all my transactions/ accounts in portfolio performance. It gives nice infos / graph. Pretty cool.

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Well done!

I am still trying to figure out how to book correctly the transactions for buying my VT ETF in USD on IB. Because first I need to exchange my CHF into USD on the FOREX, so first I buy some USD.CHF and then once I bought the USD I buy VT. Do you happen to have the same scenario? and if yes how do you book that in Portolio Performance?

I have 2 cash accounts, one in chf and one in usd. I first put money into one of them then buy the security with the cash out of it. I did not bother with the forex, just credited the account with the currency i need.

But you could:

  • credit chf in your chf account -> choose a transfer to the usd account (Enter actual forex data) -> buy VT out of usd account.
  • just create one chf cash account -> buy VT with chf account (system asks fir actual forex data)

You can always put manually the actual forex, but i am pretty sure it is possible to let it do automatically (you need a link to the forex via yahoo finance or something link that)…i saw it in a video on YouTube, but can’t remember which one. Did you look sond tutorials?

I actually tried that out which seems a good option but has one disadvantage: when you transfer the money from the CHF deposit account to the USD deposit account using the “Transfer…” option of PP (portfolio performance) you can not register any fees. Here I would like to register the FOREX commission which IBKR takes (btw this fee is reported in CHF in the activity report of IBKR).

So I had to manually enter a new position on my USD deposit account using the “Fees…” option of PP. To make things even more complicated I have to enter the fee here in USD because of the currency base of that deposit account and as mentioned above IBKR gives you this number in CHF in their activity report. Slightly annoying…

I had a look at the official youtube videos of PP (there are only 3 of them) and checked a few out of other people but these are not very good/interesting. Do you happen to remember that specific youtube video you mention?

I downloaded it months ago but not really used it. It is really a great tool!

Now I’ve inserted all my transactions in the past 5 years :sweat_smile:
It is really interesting to have an overview of everything, comparison benchmarks, fees, fantastic!

here my bad performance of a portfolio of single stocks (I’ve lost the best year 2019 to buy RE)

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I’m inserting FX fees manually as you did, as single fees entries.

Is staggering to see the total expenses I had in the past years ( Swissquote + FX spread)! 2800chf :cold_sweat:

Woah, that’s over 500 CHF of fees per year. I do everything on DEGIRO and IB and on DEGIRO I try only to buy ETFs from the list of transaction free ETFs. So what costs me the most is basically forex fees which are unavoidable. Still for a year I should be around 25-30 CHF of fees max. I haven’t finished entering all transactions as I am still trying to figure out the best way to book foreign ETFs in foreign currencies in PP.

Nice performance chart btw!

I was lazy to switch platform, now I’m on Degiro as well but I will keep SQ for diversification.

not so good as I sold tsla last year :dizzy_face:

Looks good, is there an automatable way to insert transactions, without manual input? E.g. import from csv?

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Yes you can import from csv and map the columns manually. In addition there is a module to import PDF statements from various brokers as ibkr, degiro, swissquote and many others.

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That is awesome!
I was reluctant to manually type them in, but will now give it a shot with this. :slight_smile:

@_MP

Might want to have a look at it.

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Looks like someone else has read today’s new blog post from @_MP’s :wink:

Indeed no need for Sharesight, simply use Portfolio Performance…

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