Walk me through some math, pretty please?

[sunshinegal1981]

Ok, so I am getting my feet wet with respect to investing, by playing around on one of the sites that allows you to fake invest fake money.

What I want to do, is figure out if I am correctly calculating my annual percentage return for the year to date. (I am sure I am not even using the correct terms, so please verbally admonish me or do whatever you need to do so I learn.)

From today's article on CNNMoney: "While March has not been a good month so far, the Dow is still up 4.4% for the year. The S&P 500 has gained nearly 7% and the Nasdaq is up 11.7% year to date."

How do I figure out MY year-to-date percentage?

I invested $10,000 of fake cash on Jan 2nd (pretend it was Jan 1st, whatever), and today (March 6) I have $10,459.

I *think* I know how to do this calculation, but can someone please walk me through it so I can confirm I am doing it right?

What percentage do YOU end up with, for this?

Thanks in advance!

[Deleted]

459/10000 = 4.59%

[rovo]

(Current Value - Starting Value) / Starting Value * 100%

($10,459 - $10,000) / $10,000 * 100%

( $459 ) / $10,000 * 100%

0.0459 * 100%

4.59%

or another approach ...

((Current Value / Starting Value ) -1 ) * 100%

(( $10,459 / $10,000 ) -1 ) * 100%

((1.0459 ) -1 ) * 100%

0.0459 * 100%

4.59%

[sunshinegal1981]

K, wait......

Let me ask a different way....

If I continue at the pace I'm currently going at, until Dec 31st 2012.... What will my annual rate of return be THEN?

As in.... I was hoping to get this converted into an "annual average" or something....? Can someone help me out with the terminology here?


I'm not being clear at all, am I? :-((((

It seems to me that if $10,459 was what I ended up with on Dec 31 2012, THEN you could say my annual rate of return is 4.59%.... but given that we are only 2/12 months in, at this point, wouldn't my effective 'rate to date' be ..... higher than 4.59%?

[Deleted]

ok So far 66 Days have gone by. You have "made" $459.00, Which is Equivalent to $6.95454545454 Per Day.
Assuming that you were able to "make" an Equal amount each day for the rest of the year, You would Hypothetically have "made" $2,079.4090909 for the year.
That Of Course would be Roughly 20% of $10,000.
So Hypothetically you would end up with $12,079.4090909.
However, One can not assume that they will make a Set amount EVERY day, nor should they expect to. Investing is never that cut and dry - and anyone thinking that it is,are setting themselves up for failure before they even start.

And BTW, I am not trying to be Rude - I am just trying to be as straight forward as possible.

[sunshinegal1981]

Mar 7, 2012 3:32:51 GMT -5 @di said:

ok So far 66 Days have gone by. You have "made" $459.00, Which is Equivalent to $6.95454545454 Per Day.
Assuming that you were able to "make" an Equal amount each day for the rest of the year, You would Hypothetically have "made" $2,079.4090909 for the year.
That Of Course would be Roughly 20% of $10,000.
So Hypothetically you would end up with $12,079.4090909.
However, One can not assume that they will make a Set amount EVERY day, nor should they expect to. Investing is never that cut and dry - and anyone thinking that it is,are setting themselves up for failure before they even start.

And BTW, I am not trying to be Rude - I am just trying to be as straight forward as possible.

Thanks, DI! That's more along the lines of what I meant.

Except I think you meant I would end up with $12, 538 ($12,079 would be just for the 299 days LEFT of the year... you'd still need to add the $459 I ALREADY made), which brings the rate closer to 25% by my calculation.

This is equation I used: 10459=10000*(1+(R/365))^((365*(D/365)))

Where R is the effective annual rate and D is the "current investing day", ie. 65 or 66 in this case. WHen I plug in the numbers and try to solve for R, I get an effective annual rate of 0.25, pretty much.

And YES... obviously I cant expect the remaining 299 days to be like the first 66!!!!!! I'm green, but not THAT green, guys. ;-) Just having a little 'fun with numbers' to make sure I understand things.

TY again!

[Deleted]

Reread this line -

ok So far 66 Days have gone by. You have made $459.00, Which is Equivalent to $6.95454545454 Per Day.

365 X $6.95454545454 = $ 2,538.4090909

Yup. My Bad it was really late (or Early depending on how you look at things).