From: jdavidso@teknowledge.com (Jim Davidson)
Newsgroups: misc.invest
Subject: Re: Need Rate of Return formulas
Date: 27 Jul 92 05:49:49 GMT
Organization: Cimflex Teknowledge Corporation, Knowledge Systems Division
In-reply-to: bhoughto@sedona.intel.com's message of 24 Jul 92 05:12:42 GMT

In article <12452@inews.intel.com> bhoughto@sedona.intel.com (Blair P. Houghton) writes:

> In article <1992Jul23.182625.4762@advtech.uswest.com> deg@rustin.uswest.com ( Don Gillespie) writes:
> >A real example: If I invested various sums of money into a mutual fund at
> >	various times, I'd like to calculate the rate of return based on the
> >	total amount invested vs. the current value of my account.  Note that
> >	this is quite different than the fund's effective yield since the
> >	price and dates on which I buy shares is very variable (you know, buy
> >	high, sell low :) ).
> 
> You can do it by taking a weighting of your total profit on a per-share
> basis, > but once you sell any of the shares this model becomes undefined.
> 
> >What I really want:
> >	The same thing as the previous example, but also take into account
> >	selling some of the fund shares at various times.
> 
> What you should do instead is consider each trade as a decision point, where
> you place a net-gain-since-last-trade point on the graph.  Semantically, it's
> like every time you buy or sell, you're really selling it all and buying back
> all of it plus or minus the marginal trade you just made.

	<formula for ROR deleted>

There's been some discussion lately about tools for calculating return on
investment, and for managing investments in general.  Let me put in a plug
here for PFROI.

It's available from Techserve, Inc; Box 70056; Bellevue, WA 98007.
Phone # is (206) 747-5598 or (800) 826-8082.

There are two products: PFROI and CAPTOOL.  I have the former.  It's a
financial management system that does a number of things, including ROI
calculations (hence the name).

You can use it to track all your investments.  Basically, you set up accounts,
and enter transactions as they occur.  There are a number of different types
of transactions: buy/sell/interest/dividends/stock splits/...

At any point you can get reports; these can cover things like current account
balance, transaction histories, capital gains to date, or return on
investment.  You can get various forms of ROI reports: over particular
periods; by individual security vs portfolio aggregate; before- vs after-tax.

Incidentally, there's no closed-form way of calculating ROI; they basically
do it iteratively.

I've found this package quite useful.  There are a few things that it doesn't
do -- i.e., report formats that should be available, but aren't.  Mostly,
though, it does the job.

Captool is a apparently a superset of PFROI, for folks who handle money
professionally.  I haven't tried it.

The latest price I have for PFROI is $49 ($29 without the printed manual).
Captool is $99.

Usual disclaimers; I have no connection with these folks other than being
a satisfied customer.

While we're discussing such things: Quicken (at least v4 and v5) also provides
some ROI capabilities.  Quicken is basically a cash-management & budgeting
system which has been upgraded in recent versions to do investment management.
I haven't had a chance to compare it directly to PFROI.  At first glance, it
appears that Quicken is easier to use (at least for novices), but PFROI might
provide more information for the dedicated user.  Again, that's just a first
impression.

-Jim