Daniel

13 Apr 2020

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Hi investment gurus, need some help on XIRR calculations for tracking of performance returns - should I include the sale of equities and dividends paid out but reinvested later on?

From my research, we should treat the portfolio as a blackbox, i.e. exclude reinvested dividends for XIRR calculations. How would you calculate for these scenario:

(1) Dividends only
1 Jan - $100k invested
Assuming two $500 Dividends (D) - 5 Jun / 5 Dec, reinvested within 1-2 weeks
31 Dec $110k - porfolio value

(2) Same as (1) but 5 Dec Div not reinvested as of 31 Dec

(3) Same as (1) but with Redemption
One redemption of $10k Stock A on 5 Jun, all proceeds used to purchase Stock B on 5 Jul

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Frankie Rappaport

13 Apr 2020

Sorry, i am no expert,

butI feel that the sales should be included

but the dividend distributions not.

However since You possibly do not invest the distributed dividends

the same day they are in the cash account returning interest,

this possibly gets ever complicated than.

The Excel XIRR method is anyway debated, there are different methods (all somehow virtual) too.

Maybe, even when having good performance calculations against a benchmark is favorable, still more important for success are:

-reducing fees to the minimum

-longterm buy & hold perspective

-optimum asset allocation (diversification)

more on those here:

https://seedly.sg/questions/what-is-your-genera...

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