Jan 1, 2013

XIRR Introduction

This is meant to give a brief instruction and I mean it. After which do some homework and using logics you should be able to figure out. If you have questions on the way, I will try my best to answer.

Is a measure where we can bring people nearer for performance comparison. This allow us to understand how we do among our peers and against STI benchmark as well, and where we go right or wrong.

XIRR also allows for investment in/out on discontinue and unequal periods. Which make comparison even more accurate say 2012 annualized results can be compared between individuals.

XIRR is a function in EXCEL so it is easily accessible to use.

Here's a Picture sample of a counter. In practise, you can combine all the different counters together if you like.

In this example, Annualized XIRR is 11.3% for the measured periods.

Note: Balance is the remaining shares unsold and valued per current price.

1st Jan 2013

1 comment:

  1. XIRR is just a tool. How you define a portfolio is another matter.

    To a retired person, he may want to measure his entire networth. In that case cash out after stock is sold, only means his profit is locked.

    To a young investor, with growing income from salary, his is more interested in how he managed his investible performance only. Cash out into bank is considered cash-out and no longer in the measure.

    Ofcourse they will be people inbetween who define a fixed amount of investible, and cash idle will lower the fund performance.

    So how we like to measure, is up to individual.