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Portfolio Return

  

Categories: Metrics, Managed Funds

See: Internal Rate of Return - IRR.

A given portfolio produces a return (hopefully that return is positive and high, numerically).

How do you calculate the return? Well, from start to end, remember the magic formula: New minus Old, all over Old. So if the portfolio was worth $100 million when you started, and 5 years later it was worth $180 million, then you'd calculate by taking $180 million (new) minus $100 million (old) which is $80 million, over Old...which (again) is $100 million. So the total return over 5 years is 80%.

Related or Semi-related Video

Finance: What is a Portfolio?7 Views

00:00

Finance allah shmoop What is a portfolio Well this is

00:07

an artist portfolio The clay ashtrays they did in preschool

00:11

for mom They're sketches of birds and whatever else they

00:14

could see out of their bedroom window and this hot

00:17

mess all part of their body of work All right

00:20

Moving on All right Now here's An investor's portfolio four

00:24

hundred shares a coke one hundred grand worth of corporate

00:26

bonds from comcast shell and mickey d's Two hundred fifty

00:30

shares of whatever dot com and a bunch of other

00:33

names in here Well the whole thing comprises the portfolio

00:35

of investments that mr and mrs jones air making to

00:39

you know hopefully be able to retire on what else

00:41

is in here while they're home It's probably worth eight

00:44

hundred grand Now that shoebox in palo alto subtract there

00:47

three hundred grand in mortgage and five hundred k is

00:50

thie equity value They have now in their homes Right

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What else Here's a thousand shares of the awesome yield

00:57

mutual fund in twelve hundred chairs have show me the

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money index fund added all up that's their investment portfolio

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that's everything they own or have as invested in assets

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So it's a portfolio a broad based one and a

01:11

more narrow based portfolio might be just a given mutual

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or index fund with like a focus on investing or

01:18

just a collection of a dozen stocks they owned in

01:20

a brokerage account like this one Why so many eggs

01:24

or investments Well because diversity is a good thing when

01:27

it comes to investments usually anyway unless you're zuk r

01:31

bezos or larry sergei if you found it facebook or

01:33

amazon or google well and the world looks a little

01:36

bit different from fifty thousand feet up in the air

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in your private jet But for normal people like us

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you know who don't know much about investing in internet

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stocks Well then a diverse portfolio spreads risk and volatility

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And if you're careful about not spending too many of

01:51

your beans well you two can go off into the

01:54

sunset Living a nice retirement playing with your own yacht 00:01:58.049 --> [endTime] for his rubber duckie

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