A Returns Spreadsheet for Bogleheads

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sean.mcgrath
Posts: 318
Joined: Thu Dec 29, 2016 6:15 am
Location: US in NL

Re: A Returns Spreadsheet for Bogleheads

Post by sean.mcgrath » Thu Jun 18, 2020 6:26 am

longinvest wrote:
Thu Jun 18, 2020 6:18 am
sean.mcgrath wrote:
Thu Jun 18, 2020 6:15 am
I think you missed my edit, though. I confirmed your statement.
I saw your edit, but it didn't retract your statement about how I was calculating returns. I thought that it was important to clarify that the choice of reinvesting dividends or withdrawing them has no impact on time-weighted returns which are used in most forum discussions and are reported by mutual funds.
Got it. Makes sense.

jalm1
Posts: 14
Joined: Sat Jun 09, 2012 1:55 pm

Re: A Returns Spreadsheet for Bogleheads

Post by jalm1 » Mon Jun 29, 2020 9:51 pm

First, thanks @Longinvest for making this sheet! I've been looking using the workbook to replace my current sheet.

One of the strengths is showing both IRR and TWR. I currently only track inception to date IRR and my issue has been that I can't see returns by other periods of time. This workbook solves that.

My question, which is more theoretical, why not also look at IRR across various time frames (e.g., 1 yr, 3 yr, 5 yr, 10 yr, total)? TWR is great for comparing portfolios, but it isn't the return I can touch. Is there anything that I am missing on why I wouldn't want to also calculate various IRRs?

Topic Author
longinvest
Posts: 4275
Joined: Sat Aug 11, 2012 8:44 am

Re: A Returns Spreadsheet for Bogleheads

Post by longinvest » Mon Jun 29, 2020 10:38 pm

jalm1 wrote:
Mon Jun 29, 2020 9:51 pm
My question, which is more theoretical, why not also look at IRR across various time frames (e.g., 1 yr, 3 yr, 5 yr, 10 yr, total)? TWR is great for comparing portfolios, but it isn't the return I can touch. Is there anything that I am missing on why I wouldn't want to also calculate various IRRs?
Jalm1, I don't see a good use for period-specific money-weighted returns and plenty of bad uses, like comparing them to time-weighted fund or benchmark returns over identical periods, which is invalid and could easily lead to behavioral mistakes.
Bogleheads investment philosophy | One-ETF global balanced index portfolio | VPW

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