Course 506: Calculating Your Personal Rate of Return
Reported Returns versus Personal Rates of Return
In this course
1 Introduction
2 Reported Returns versus Personal Rates of Return
3 Calculating Your Personal Return
4 How to Do It
5 What Personal Returns Tell You

The simplest way to calculate return numbers—and the way Morningstar and most other sources do it—is to assume you made a single lump-sum investment at the beginning of the reporting period. So the 15% return on your fund assumes that you bought all of your shares right at the beginning of the year.

Often, however, your personal rate of return will be different. If you bought or sold shares during the period for which a return is being calculated, or if you didn't buy exactly at the period's start, your personal return won't match the formulaic return. Put another way: Your fund's trailing 12-month return doesn't tell you how you've been doing if you invested $100 each month rather than $1,200 up front.

Next: Calculating Your Personal Return >>


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