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Portfolio123 » List all forums » Forum: Simulations and Portfolios » Thread: Cash Withdrawal affects return%, annualized return? |
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pagosa1
Advanced Member  UNITED STATES Joined: Nov 26, 2003 Posts: 84 Status: Offline |
I recorded a 10% cash withdrawal in one portfolio and it appears to have affected total return%, annualized return%, summary chart, etc. Is this to be expected or is this an error in the system? |
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crakes
Advanced Member
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It would make sense that a withdrawal will affect your returns. By withdrawing funds instead of reinvesting, the future returns will be compounding on a smaller base. But I do see where your question begs the need to know more about the Port123 calculations. If the percentage returns caculated by Port123 are based on terminal value, the returns should be lower since you have made a withdrawal. If the percentage returns caculated by Port123 are based on a calculation that properly accounts for the additions and subtractions of cash, as some better portfolio software will do, then the returns following a withdrawal 'should be' the same. But the Port123 is first a simulator, only second (a far second) a portfolio manager... I said returns 'should be' the same because your cash withdrawal my have precluded you from buying a recommendation. Any change to your buys will affect the returns - a butterfly affect that is built into the simulations. ---------------------------------------- [Edit 1 times, last edit by crakes at Jan 7, 2007 10:47:26 AM] |
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Cash Withdrawal affects return%, annualized return?
