Question about average annual returns

The "Glossary" menu item on the Portfolio tab will give you Quicken's definitions of all the terms used in the Portfolio view: check all the ones with "return" in the name.

Are there ANY dividends/etc. generated by the investment over the period in question? Whether they're reinvested, or taken as cash, they'll impact the IRR formula.

Was there any commission (or other fees) applied to the original purchase? Again, these'll impact the calculation.

db

I have done a lot of work over the years on calculating returns. If it helps, all my investigation shows that Quicken calculates the return properly. Discrepancies are always caused by comparing different time periods or incorrect data.

That being said, one year returns are particularly easy to analyze. Given your data, you are correct that an investment which grew from $2500 to $2932 over one year is a 17.3% return.

To explain the discrepancy, I would look for the following:

1. Is the period exactly one year? If it's only say, 11 months, that would explain why Quicken is giving you a higher number.
2. Did you take any money out of the position during that time period? Again, that would explain the higher number.

Does this help?

Hi MikeH!

I tested this. Bought a ficticious security on 1/1/2005 paying $50 a share wo/commission. Paid total of $2500. Manually made the value of each share as of 12/31/2005 to be $58.64. Total position in the 50 shares is now $2932. The Investment Portfolio column, set to read 12/31/2005, is showing the "Average Annual Return for 1 Year" to be 17.28%, close enough to your 17.3% which is what you think it should be. Not sure how you got 21.4%

So I think something is amiss with the way you're recording your figures (as others said, maybe you've got other transactions or date range differences). But Q seems right in my test - at least in matching what your

Regards -

- Andrew

I have a follow-up question to this thread, or maybe the same question restated. I have a bunch of mutual funds, the oldest of which, VFINX, I've held for 7 years. I own 5 others that I've held for more than 4 years, and the rest have been held for various lesser periods.

The ONLY fund that Quicken will display Returns for YTD, 1 year, 3 years, & 5 years is VFINX. The rest of the funds display N/A, for ALL the above time spans.

It's almost as if I have to own a fund for more than five years in order for Quicken to display ANY return percentages.

This problem does NOT occur on the half dozen or so individual stocks that I own. They display appropriate return values dependent on how long I've held them.

Anybody else have this problem, or even better, a solution to it?

Thanks in advance...

What version/year of Quicken?

Are you looking at a view that has a "Group by" of "Accounts"? What do you see if you "Group by" "Security"?

How did the securities that show "N/A" get in the account in which they are currently held? Were they purchased in that account? Or were they transferred into that account from another Quicken account?

It appears to me that Quicken, probably rightly, computes Average Annual Return for securities held in a account ... based on the date the security was first held in the account ... not necessarily the date the security was first acquired. In other words: if you've only held the security in Account B for 4 years, there is no 5 Year Average Annual Return on that security in that account.

If you switch the Group By to "Security", Quicken makes the computation based strictly on the date the security was acquired.

By God, John, you nailed it - I switched the view to "by security" and voila! The returns are displayed dependent on the time of purchase, just like the individual stocks were. Problem solved!

This probably came about because last year, my bank eliminated the previous account type I held most of my mutual funds in. I had to migrate the holdings to a new account in Quicken - as opposed to VFINX, which I've held in the same IRA account since purchased.

Thank you so much for your keen insight and knowledge of Quicken. This apparent defect has annoyed me for quite a long time.