Detailed Portfolio FAQ

1. How is performance calculated for detailed portfolios?

Money Weighted (IRR) calculations take only three things into account: Deposits, Withdrawals and the portfolio's final value¹. This means that fluctuations in stock price, dividends, interest and expenses are not directly included in the IRR calculation. They are included in the calculation because they affect the portfolio's final value.

Time Weighted calculations are similar to IRR calculations except they factor out the effect of Deposits and Withdrawals. For example, consider a portfolio where $10,000 is invested the first year and an additional $10,000 is invested for the second year. An IRR calculation would give more weight (or more importance) to the second year because more money has been invested for that time period. A time weighted calculation would treat both periods equally.

2. How do I enter interest?

While viewing your detailed portfolio, click on the "Edit Transactions" tab. Next add an "Interest/Expense" transaction. Enter the date the interest was received and the amount. It would be a mistake to add interest using a deposit transaction. Although the portfolio cash value would be correct, the portfolio performance would be incorrect because the deposit transaction will have an unwanted effect on the performance calculation.

3. How should I treat account fees?

The proper way to treat account fees depends on how the fees were paid. Were they paid from your bank account with a check, from existing cash within the account, or were stocks sold to pay the fee?

If the fees were paid from your bank account with a check then they should be treated as a Deposit with an Amount and Cost equal to the fee. This is equivalent to saying that money was added to the portfolio, then immediately taken away as an expense.

If the fees were paid from existing cash within the account the fees should be paid using an "Interest/Expense" transaction. The amount should be the negative of the fee. A positive value would result in interest instead of an expense.

If stocks (or mutual funds, etc.) were sold to cover the fee then you can enter a "Sell" transaction with the Amount and Cost equal to the fee. If multiple stocks were sold then the Cost should be broken up over multiple sell transactions.

4. How should I treat taxes?

Taxes should be treated like an account fee. You can think of it as an account fee paid to the government. See "How should I treat account fees?" for more information.

Footnotes

For IRR calculations the portfolio's final value is treated as a withdrawal of the entire portfolio amount.