ROI calculation in Investment Performance Report

mhoggie's Avatar

mhoggie

15 Dec, 2023 02:08 PM

I'm trying to get my head around the ROI calculation used in the MD Investment Performance Report.

Just trying to use the simple ROI formula of:
ROI =Gain from Investment - Cost of Investment / Cost of Investment

Times 100 to get the percentage.

The Investment Performance Report seems to be using a different formula

i.e. investment of $405.81 with current value of $434.75 comes up with 7.13% ROI using the ROI formula.

But the MD Investment Performance Report comes up with 6.91% ROI.

Anyone have any ideas why ?

  1. 1 Posted by mhoggie on 23 Dec, 2023 05:23 PM

    mhoggie's Avatar

    Another issue I noticed is how the Investment Performance Report is affected by reverse security splits. The report seems to be affected by the reverse security split as an Annual ROI % gain of over 100% when actually nothing of value changed

  2. 2 Posted by dwg on 23 Dec, 2023 09:54 PM

    dwg's Avatar

    The investment performance report has had more than its share of issues over the years. I think it probably needs to be reworked from scratch.

  3. 3 Posted by mhoggie on 25 Dec, 2023 07:31 PM

    mhoggie's Avatar

    just a user,

    In my efforts to try to understand the issues with the "Investment Performance Report", I did discover a report calculation that does not make sense to me.

    When you run the report, one of the columns returned is "Return Amount". My assumption is that the "Return Amount" would be the current security value minus the cost + buys -sales. But the report appears to be adding the "Income" column to the current value shown before subtracting the cost + buys -sales. The "Income" amount is already included in the security value amount, so it appears that calculation for the return amount is off by the amount of the "Income" column.
    See if that is what you find or is there another explanation.

  4. 4 Posted by mhoggie on 25 Dec, 2023 07:55 PM

    mhoggie's Avatar

    just a user,

    Including the "Income" with the Security Value also affects the Return % on the report because MD seems to be using the suspect "Return Amount" in the Return % calculation.

  5. 5 Posted by dwg on 25 Dec, 2023 09:46 PM

    dwg's Avatar

    It's a problematic report as it stands.

    I think the report needs to show more data, as well as being correct.

    For a current Investment I would expect to see the gains being the unrealised + realised capital gains, the return amount the amount of income received, so for shares that would be dividends, a total return amount being the sum of these two, the annual ROI% the obvious calculation etc. but I would also like to see the capital gains and the return as a percentage, total and annual. Why? because as a retiree I want to see if my capital value is keeping up with inflation and the return amount % to compare the rate of return of income of this investment against other possible investments.

    This does raise problems in my case because say just using the single category Dividend would not achieve the goal due to the need to categorise income, possibly using the action type Div may.

    Hence I see this report needs work and also guidelines of how to enter transactions to ensure they are picked up correctly by the report.

  6. 6 Posted by Stuart Beesley ... on 17 Feb, 2024 10:47 AM

    Stuart Beesley (Mr Toolbox)'s Avatar

    Refer:
    https://infinitekind.tenderapp.com/discussions/investments/8386-inv...

    @dwg. See that thread where I have posted the return amount calculation.

    I’m interested to get report fixed if the return amount calc is not correct. Can you post your comments there?

    @mhoggie, anywhere that uses avg cost with splits has issues. I have proposed fixes to these. Currently testing this….

  7. 7 Posted by Bob Sacamano on 08 Apr, 2024 10:59 AM

    Bob Sacamano's Avatar

    I would love to know the difference between the Investment Performance, and Portfolio Reports? Does anyone know?

  8. 8 Posted by Stuart Beesley ... on 08 Apr, 2024 12:29 PM

    Stuart Beesley (Mr Toolbox)'s Avatar

    Performance does extensive calculations of related income/expense to calculate ROI etc, the other is simply a snapshot of your portfolio?

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