Calculating total portfolio gain/loss . . .

[Broozer]

Schwab, in their downward spiral in the past year or so, no longer gives me this number. They re-arranged their portfolio performance section about 6 months ago, and have taken away several valuable tools -- this being one.

I have two accounts that I call my Total Portfolio -- a SEP-IRA and a taxable account. They still give me the percent gain/loss for each account for a given time period, but not a top-down, weighted for each account, single percent number like they used to. They kept promising they would bring that data back each time I asked since last fall, but I asked again last week and the woman didn't even know what I was talking about.

I'm not sure if I have this right, hopefully some of you brainy guys can steer me in the right direction.

I'll use simple numbers to keep things easy.

SEP has $600 - Schwab says this account went up 1.3% YTD
TAX has   400 - Schwab says this account went up 3.36% YTD

I'm taking the $600 figure and calling it 60%

And the $400 figure and calling it 40%.

So:   60% of 1.3% = .78%

And: 40% of 3.36% = 1.344%

.78 + 1.344 = 2.124% return total return for both accounts, YTD, properly weighted.

Is this right? What if one account had a positive return and one account negative?

[fishingrod]

Not a brainiac here but you are correct in your math. If one is negative you would add or subtract the smaller amount from or to the larger I think.
So if you had one at +3.50% and the other at -1.0% you would get +2.50%

If you had -3.50% and +1.5% you would get -2.0%

[Fearchar]

I don't think that's correct.

$600/1.3% = $46,153.85
$400/3.36% = $11,904.76

I will not quibble if these value are before or after.

However the total is $58,058.61

$600+$400 = $1,000

$1,000/$58,058.61=0.0172 or 1.72% 

[fishingrod]

For an example

If a portfolio is made up of 55% stocks, 40% bonds, and 5% cash, those weights would be multiplied by their annual performance to get a weighted average return. So if stocks, bonds, and cash returned 10%, 5%, and 2%, respectively, the weighted average return would be (55 × 10%) + (40 × 5%) + (5 × 2%) = 7.6%.

[FD1000]

Apr 1, 2023 14:35:49 GMT Broozer said:

Schwab, in their downward spiral in the past year or so, no longer gives me this number. They re-arranged their portfolio performance section about 6 months ago, and have taken away several valuable tools -- this being one.

I have two accounts that I call my Total Portfolio -- a SEP-IRA and a taxable account. They still give me the percent gain/loss for each account for a given time period, but not a top-down, weighted for each account, single percent number like they used to. They kept promising they would bring that data back each time I asked since last fall, but I asked again last week and the woman didn't even know what I was talking about.

I'm not sure if I have this right, hopefully some of you brainy guys can steer me in the right direction.

I'll use simple numbers to keep things easy.

SEP has $600 - Schwab says this account went up 1.3% YTD
TAX has   400 - Schwab says this account went up 3.36% YTD

I'm taking the $600 figure and calling it 60%

And the $400 figure and calling it 40%.

So:   60% of 1.3% = .78%

And: 40% of 3.36% = 1.344%

.78 + 1.344 = 2.124% return total return for both accounts, YTD, properly weighted.

Is this right? What if one account had a positive return and one account negative?

Yes and what I do.

[FD1000]

Apr 1, 2023 15:29:59 GMT Fearchar said:

I don't think that's correct.

$600/1.3% = $46,153.85
$400/3.36% = $11,904.76

I will not quibble if these value are before or after.

However the total is $58,058.61

$600+$400 = $1,000

$1,000/$58,058.61=0.0172 or 1.72% 

I don't get the above.

Suppose I have 2 accounts X=$60K  Y=$40K.
X made 1.3% = $780
Y made 3.26% = $1344
Total = $2124

(2124 / $100K) * 100 = 2.124%

[Mustang]

It appears that some are using the $600/400 numbers as beginning principal and some are using them as annual return.

[Fearchar]

Apr 1, 2023 16:43:16 GMT Mustang said:

It appears that some are using the $600/400 numbers as beginning principal and some are using them as annual return.

Yeah; the OP wasn't very clear.

I'm not accustomed to $400 being an account total.

[steadyeddy]

The OP's math is correct if the $600 and $400 are beginning balances for the year.

[Broozer]

Dang, thanks to all who replied -- I had to go back and re-think this. I made it much more complicated than need be -- the dollars shouldn't have been used.

What I originally said:

SEP has $600 - Schwab says this account went up 1.3% YTD
TAX has 400 - Schwab says this account went up 3.36% YTD

I think the question should have been:

SEP is 60% of my total portfolio

TAXABLE is 40% of my total portfolio

Schwab says SEP is up 1.3% as previously noted;

Taxable is up 3.36%.

So then my original math was okay, I was just applying it wrong:

So: 60% of 1.3% = .78%
And: 40% of 3.36% = 1.344%

.78 + 1.344 = 2.124% total return for both accounts, YTD, properly weighted.

Does this make more sense, and am I right this time?

[steadyeddy]

Broozer , let us stick with $ to illustrate how to calculate.

If you now have $600 in SEP, and it gained 1.3% YTD, then at the beginning of the year you had $592.30. How did I get that number, you might ask? 600/(1.013) = 592.30.
In other words, a balance of $592.30 on Jan 1st became $600 yesterday if it gained 1.3%.
Likewise, $400 in TAX now, with 3.36% YTD gain, was $386.99 on Jan 1st.

So, your starting balance in two accounts on Jan 1st is $592.3+$386.99 = $979.29. Now those two accounts have together grown to $1000. Total gain of $20.71.
Overall gain then is = $20.71/$979.29 = 2.11% which is close enough to your math of 2.124%.

So, if you really want to be accurate, you need to do a bit of math. You can use excel if you are comfortable with it.

Hope this helps.

[FD1000]

Just like Broozer, I have used Schwab total portfolio performance, but also SD which gets you closer to risk-adjusted returns.
All you have now in performance per account with no SD.  Using Boozer calculations for all accounts gets me a close results for all accounts.

[Broozer]

Eddy and FD, thanks for your input. I'm getting kinda lost in this now. I've had numerous cocktails and probably shouldn't be trying this stuff late on a Saturday night. I spent 53 years of my life doing trig/geometry as a toolmaker which was fairly easy, but this is a different type of math. Plus I've been retired for two years, so not doing much math anymore.

I'm going to try this with my real percentages and see if you guys agree. Everything here is for YTD.

SEP is 73% of my portfolio; Schwab says my return for that portion is +1.3%.

TAX is 27% of my portfolio; return is +3.36%.

SEP: 73 x 1.3% = .949%
TAX: 27 x 3.36% = .907

TR for portfolio, rounded: .95 + .91 = 1.86%

Wow I gotta let this go til tomorrow, lol.

[Broozer]

FD1000 ,  Was "Boozer" a typo?

[FD1000]

Apr 2, 2023 3:00:03 GMT Broozer said:

FD1000 ,  Was "Boozer" a typo?

Yes, sorry, watch final 4 and typing.  I fixed it and will delete current post later

[Broozer]

Apr 2, 2023 3:08:35 GMT FD1000 said:

Apr 2, 2023 3:00:03 GMT Broozer said:

FD1000 ,  Was "Boozer" a typo?

Yes, sorry, watch final 4 and typing.  I fixed it and will delete current post later

That's okay, I thought it was funny -- especially considering my previous post.

[fritzo489]

Broozer,fishingrod,Fearchar,FD1000,Mustang,steadyeddy,
What I don't like about Chuck's addition . If one adds money to their account they include this as account gain. How true is this ? If anyone can tell me how to have them use only Equity gain I would appreciate that . Maybe a good question if, when, I receive a call from them.
Done ranting, fritzo489

[Broozer]

Apr 2, 2023 13:30:46 GMT fritzo489 said:

Broozer ,fishingrod ,Fearchar ,FD1000 ,Mustang ,steadyeddy ,
What I don't like about Chuck's addition . If one adds money to their account they include this as account gain. How true is this ? If anyone can tell me how to have them use only Equity gain I would appreciate that . Maybe a good question if, when, I receive a call from them.
Done ranting, fritzo489

LOL, yes that's called "Beardstown Math" in my corner, reflecting on how an investing group called The Beardstown Ladies consistently "beat the market" by a comfortable margin, as I recall. Apparently they got a lot of media attention over it, and finally someone looked at their math. They were counting portfolio donations as part of total return, lol.

I've had this formula for years for figuring contributions or withdrawals into the true total return of a portfolio. I never used it because Schwab always had it figured out as part of their performance section.

I just dug this out of my notes. It originally came from the "Four Pillars of Investing."

--------------------------------------------------------------------------------------

To calculate return, divide ending number by beginning number and subtract 1. See "Four Pillars of Investing," page 186-187, footnotes.
EXAMPLE:

$10,000 starting amount
$11,000 ending amount. Divide 11k by 10k and subtract 1.
Division = 1.1, subtract 1 and answer is .1 or 10% rate of return

With contributions (or withdrawals): Example - Use $500 as "net inflow." Subtract half from large number and add half to smaller number, so
(11,000-250) (10,000+250) = 4.9% return

[FD1000]

Apr 2, 2023 13:30:46 GMT fritzo489 said:

Broozer ,fishingrod ,Fearchar ,FD1000 ,Mustang ,steadyeddy ,
What I don't like about Chuck's addition . If one adds money to their account they include this as account gain. How true is this ? If anyone can tell me how to have them use only Equity gain I would appreciate that . Maybe a good question if, when, I receive a call from them.
Done ranting, fritzo489

Not true. IMO the performance is accurate.

1) I did a conversion (adding) money from Rollover to Roth. I added more than 10%. Performance doesn't reflect an additional 10+%.
2) I took money from our taxable account more than what we made in that taxable account.  Performance is still positive.

[steadyeddy]

Apr 2, 2023 2:54:22 GMT Broozer said:

Eddy and FD, thanks for your input. I'm getting kinda lost in this now. I've had numerous cocktails and probably shouldn't be trying this stuff late on a Saturday night. I spent 53 years of my life doing trig/geometry as a toolmaker which was fairly easy, but this is a different type of math. Plus I've been retired for two years, so not doing much math anymore.

I'm going to try this with my real percentages and see if you guys agree. Everything here is for YTD.

SEP is 73% of my portfolio; Schwab says my return for that portion is +1.3%.

TAX is 27% of my portfolio; return is +3.36%.

SEP: 73 x 1.3% = .949%
TAX: 27 x 3.36% = .907

TR for portfolio, rounded: .95 + .91 = 1.86%

Wow I gotta let this go til tomorrow, lol.

Broozer , if you want precision in your calculations your math is not correct because you are starting with today's values not Jan 1st values. Also it doesn't take into account any money added or taken away from the accounts.

There are time-weighted returns, money-weighted returns, and also returns with/without reinvestments of dividends.

So, first you need to decide how complicated you want to make this. 

[FD1000]

Apr 2, 2023 16:26:51 GMT steadyeddy said:

Apr 2, 2023 2:54:22 GMT Broozer said:

Eddy and FD, thanks for your input. I'm getting kinda lost in this now. I've had numerous cocktails and probably shouldn't be trying this stuff late on a Saturday night. I spent 53 years of my life doing trig/geometry as a toolmaker which was fairly easy, but this is a different type of math. Plus I've been retired for two years, so not doing much math anymore.

I'm going to try this with my real percentages and see if you guys agree. Everything here is for YTD.

SEP is 73% of my portfolio; Schwab says my return for that portion is +1.3%.

TAX is 27% of my portfolio; return is +3.36%.

SEP: 73 x 1.3% = .949%
TAX: 27 x 3.36% = .907

TR for portfolio, rounded: .95 + .91 = 1.86%

Wow I gotta let this go til tomorrow, lol.

Broozer , if you want precision in your calculations your math is not correct because you are starting with today's values not Jan 1st values. Also it doesn't take into account any money added or taken away from the accounts.

There are time-weighted returns, money-weighted returns, and also returns with/without reinvestments of dividends.

So, first you need to decide how complicated you want to make this. 

Schwab take into effect added/withdrawal of money.  Since you select start and end day you get total return for these days. Distributions should be included too if they are within these days.

This is how it works, below is a quote from Schwab.

How is rate of return calculated?
We use the daily time-weighted return method to find your rate of return. This method calculates daily value changes, then adjusts for the timing and size of any contributions and withdrawals you made.

Show Example

Alex’s brokerage account is valued at $10,000 on January 1. By July 1, the account value has risen to $12,500. Alex then invests $5,000 on July 1, resulting in a new value of $17,500. By the end of the year, the account value has risen again to $20,000.

Image of Value vs. net contributions for this example

How would we calculate Alex’s rate of return from January 1 to December 31, considering the contribution made on July 1?

Step 1: Divide the overall time period into sub-periods based on times where Alex contributed or withdrew money.

Jan 1–Jul 1: Sub-period #1

Jul 1–Dec 31: Sub-period #2

Step 2: Find the rate of return for each sub-period using this calculation:

((Ending value – net contributions) / beginning value) – 1 = sub-period return

Sub-period #1: (12,500 / 10,000) – 1 = 25.0%

Sub-period #2: (20,000 / 17,500) – 1= 14.3%

Step 3: Combine the returns using this calculation:

(1 + sub-period #1 return) × (1 + sub-period #2 return) – 1



(1 + 0.250) x (1 + 0.143) – 1 = 42.9%

Alex’s daily time-weighted return from Jan 1 to Dec 31: 42.9%

Cumulative and annualized returns

In our example, we looked for the rate of return for an account for one year. The value we found is called a cumulative return.

For time periods longer than a year, we can look for an annualized return. An annualized return is the average rate of return each year. This can be helpful when comparing your performance to market indexes, whose returns are always annualized.

If your time period is longer than 365 days, you can see this number by checking the “Show annualized returns” box. Note: This will not affect the numbers shown on the chart.

[Chahta]

Broozer , I guess I am not following you, but I look at the Accounts Summary page and I see total of accounts change, by dollars and percent,  for 1 mo. to 2 yr. But you want to know the change by account?

[FD1000]

Apr 2, 2023 21:05:00 GMT Chahta said:

Broozer , I guess I am not following you, but I look at the Accounts Summary page and I see change for 1 mo. to 2 yr. But you want to know the change by account?

That's different. It doesn't take into consideration addition/withdrawal money.

Example: Let's assume an easy one.
Suppose I have one account staring 2023 with $100K and made $1000. I made 1% per YTD performance.
What if I withdrew $20K in the last day, performance would be about 1% but the summary chart will show $81K and a loss of 19%.
You have to use the portfolio performance tab, see below, and not look at the chart under the summary.

Attachments:

[Chahta]

That makes no sense. Where do you find that info?
Bruzer said "portfolio gain/loss"

[FD1000]

Apr 2, 2023 21:31:07 GMT Chahta said:

That makes no sense. Where do you find that info?
Bruzer said "portfolio gain/loss"


View Attachment

Where I found my info? See attach below.

I will explained it one last time. It takes too much time to explain
When you look at the tabs account, and then summary: you get your portfolio total for all the accounts, but wait, you can link to several other accounts from other brokers.
When I access Schwab under my name I see Schwab + Fidelity accounts because I set it up this way. When I access under my wife, I see only Schwab accounts.

So, what's the difference between looking under Accounts/SUMMARY to Accounts/Portfolio Performance?
1) Summary shows only 2 years and you can't select specific date in the past. Performance have many years + start/end date selections.
2) Suppose I have one joint taxable account at Schwab all invested in SPY and one at Fidelity all in QQQ, each account started at $100K on 1/1/2023 .
If I look under my name I will see....rounding up (SPY=8%   QQQ=21%)...$108K+121=229.  Portfolio summary made 14.5% YTD
If I look under my wife I will see...$108K...portfolio summary made 8% YTD.
If I look under Accounts performance for the joint account at Schwab I will get 8% under my name and under my wife name. It is the actual performance.
3) Performance take into consideration addition/withdrawals.
Example: Let's use the above at 2).
If I took out $10K last Friday.
1) Summary under my name will show $229-10=$219 and making 9.5% = wrong.
Summary under my wife $108-10=$98. Losing $2K = 2% = wrong.
Performance under my wife+me for Schwab joint=making 8%, because performance made adjustment for the withdrawal. 

Attachments:

[Broozer]

FD1000, I was just going to post Schwab's time-weighted explanation but I see you already did -- thanks. I have RMDs taken out every month, most of which I re-invest in my taxable account, some I withdraw and live on, which are accounted for when they figure the actual total return.

They provide the TR numbers for each account, and all I wanted to do (as you know) is find one TR weighted for both accounts -- which they used to provide but no longer do.

[Broozer]

FD1000 ,Chahta ,

Expanding on FD's explanation and hopefully answering Gary's question:

Schwab's Accounts Summary shows "change" for the day, and "change" for the selected time frame, I use YTD.

"Change" will include contributions or withdrawals, which is not total return.

[fritzo489]

FD1000, It seems Schwab has changed their format since the last time I used portfolio performance.
Thanks, Derf

[Broozer]

Apr 3, 2023 4:30:54 GMT fritzo489 said:

FD1000, It seems Schwab has changed their format since the last time I used portfolio performance.
Thanks, Derf

They changed everything around last fall, including the research section. All for the worse of course.

[Chahta]

Bruzer said “total gain/loss” in the thread title. But now mentions “total return”. I get it now. It’s 2 different things.

@bruzer, I agree the research section has declined. It is amazing to me that so many programmers need to be employed making changes just because…