Friday, June 6, 2014

Inclusion of CAGR to Portfolio Update

It has been more than a year since inception of my portfolio. I have decided to include CAGR computation to my routine portfolio update.

CAGR or Compound Annual Growth Rate is a method to track the smoothened returns or rate at which an investment would have grown if it is assumed to grow at a steady rate. (refer to Investopedia).



Point worth noting is that CAGR is a way to measure growth over multiple time periods, and it's more meaningful over a long period of time (in terms of several years to decades). My reason to include this measurement is more for reference purpose, and does not have any real indication on investment performance. Also, CAGR for investment period under a year should be inaccurate as the value is inflated.

Use of CAGR for comparison are used by some bloggers to benchmark their investment against known funds. I have included an example below from CreateWealth8888.



Going through my spreadsheet, I realised that my portfolio performance (after adjuested for AAReits Rights and UMS Bonus issues) have been doing this :)



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