Read?
XIRR is really simple to use!
You may have been using XIRR to measure portfolio performance and may have faced these two common issues:
- Cash withdrawal from your portfolio for spending (exchange your investment dollars to enjoy life)
- Cash injection into your portfolio as new capital for investing
Cash Withdrawal will improve XIRR
See the following examples for Investor A . His XIRR and his investment portfolio.
His XIRR as on 31 Dec 2011 since investment =
14.3%
Assuming he has decided to withdraw $10K cash from his investment portfolio for his overseas holidays trip.
So after withdrawing $10K from his investment portfolio, his XIRR will look like this:
His XIRR immediately improves from 14.3% to 14.5%. The more money he spent from his investment portfolio and more his XIRR improves. This is really NONSENSE!!!
For cash withdrawal from investment portfolio, we will have to make pro rated ...
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