Real average rate of return on IRA investement

Rovs

New Member
Joined
Jan 20, 2010
Messages
3
I have a spreadsheet with the following columns:
A= count of years
B= year
C= iRA Balance at start of year
D= yearly contribution
E= IRA Ending value

I can get the average yearly interest rate of the entire portfolio. Unfortunatly this rate includes my contributions so I believe the rate of return is artifically high. My contributions make it look like I am getting a higher rate of return than if I had not made IRA contributions. I need a way to calculate the real average yearly interest rate I made on the account minus (or taking into concideration) the money I put into it.

Thanks in advance
 

Rovs

New Member
Joined
Jan 20, 2010
Messages
3
I may have a solution myself but I am not sure. If I have made $100,644 return on a $192,519 investment, I have made a 52.28% ROI. If that investment was over 13 years, would the annual ROI be 52.28/13 or 4.02%? The $192,519 was not a lump sum but spread over various payments over the 13 years so the above may not be correct. Anyone have a comment?
 

AdamL

Well-known Member
Joined
Sep 25, 2008
Messages
767
would the annual ROI be 52.28/13 or 4.02%?
No, it would be less, based on the compound interest formula:

A=P(1+r)^n

Solving for r:

r=(A/P)^(1/n)-1
=((100644+192519)/192519)^(1/13)-1
=3.2878%
 

Rovs

New Member
Joined
Jan 20, 2010
Messages
3
Hello Adam

I see your point but from my reading, the P in the formula only applies to one initial payment. Since this $192519 was actually paid in small parts over a 13 year period, wouldn't the calculation be off?

Thanks in advance
 

Forum statistics

Threads
1,081,832
Messages
5,361,586
Members
400,639
Latest member
fleyd

Some videos you may like

This Week's Hot Topics

  • populate from drop list with multiple tables
    Hi All, i have a drop list that displays data, what i want is when i select one of those from the list to populate text from different tables on...
  • Find list of words from sheet2 in sheet1 before a comma and extract text vba
    Hi Friends, Trying to find the solution on my task. But did not find suitable one to the need. Here is my query and sample file with details...
  • Dynamic Formula entry - VBA code sought
    Hello, really hope one of you experts can help with this - i've spent hours on this and getting no-where. .I have a set of data (more rows than...
  • Listbox Header
    Have a named range called "AccidentsHeader" Within my code I have: [CODE]Private Sub CommandButton1_Click() ListBox1.RowSource =...
  • Complex Heat Map using conditional formatting
    Good day excel world. I have a concern. Below link have a list of countries that carries each country unique data. [URL...
  • Conditional formatting
    Hi good morning, hope you can help me please, I have cells P4:P54 and if this cell is equal to 1 then i want row O to say "Fully Utilised" and to...
Top