I'm trying to help a friend calculate the annual rate of return for his boss's brokerage account. The raw data:
Year Date Net Transactions Gains/Losses Earnings Overall change2022 1/1/2022 $3,210.00 $22.24 $0.00 $3,232.242022 2/1/2022 $1,710.00 ($101.43) $0.34 $1,608.912022 3/1/2022 $1,710.00 $233.06 $0.00 $1,943.062022 4/1/2022 $3,210.00 ($712.61) $19.87 $2,517.262022 5/1/2022 $1,710.00 $56.34 $0.00 $1,766.342022 6/1/2022 $1,710.00 ($918.07) $0.00 $791.932022 7/1/2022 $3,210.00 $1,217.34 $51.87 $4,479.212022 8/1/2022 $1,710.00 ($736.93) $0.00 $973.072022 9/1/2022 $6,751.21 ($1,678.77) $0.00 $5,072.442022 10/1/2022 $10,589.84 $1,982.02 $104.10 $12,675.962022 11/1/2022 $11,593.35 $2,209.79 $0.00 $13,803.142022 12/1/2022 $11,837.04 ($3,280.64) $242.44 $8,798.842023 1/1/2023 $6,501.98 $3,748.00 $0.00 $10,249.982023 2/1/2023 $5,001.99 ($1,761.70) $0.00 $3,240.292023 3/1/2023 $5,001.99 $2,810.93 $0.00 $7,812.922023 4/1/2023 $6,501.99 $953.41 $296.88 $7,752.282023 5/1/2023 $5,001.98 $399.27 $0.00 $5,401.252023 6/1/2023 $5,001.99 $6,151.51 $0.00 $11,153.502023 7/1/2023 $6,502.00 $2,981.85 $401.08 $9,884.932023 8/1/2023 $5,001.99 ($1,779.56) $0.00 $3,222.432023 9/1/2023 $5,001.98 ($5,682.92) $0.00 ($680.94)2023 10/1/2023 $6,501.99 ($2,963.60) $433.01 $3,971.402023 11/1/2023 $5,001.99 $11,027.97 $0.00 $16,029.962023 12/1/2023 $4,977.99 $5,566.93 $609.85 $11,154.772024 1/1/2024 $6,752.00 $2,463.76 $0.00 $9,215.762024 2/1/2024 $82,074.39 $9,826.36 $0.00 $91,900.752024 3/1/2024 $77,311.36 $9,830.31 $0.00 $87,141.672024 4/1/2024 $6,751.99 ($14,814.89) $1,012.96 ($7,049.94)2024 5/1/2024 $5,252.00 $16,297.67 $0.00 $21,549.672024 6/1/2024 $5,251.99 $12,545.60 $0.00 $17,797.592024 7/1/2024 $6,751.99 $3,232.06 $1,207.32 $11,191.372024 8/1/2024 $5,252.00 $9,296.70 $0.00 $14,548.70So I'm trying to use the XIRR function and take every net transaction as negative cash flow and add the final balance as positive cash flow. Then I use XIRR() over both of these columns:
Date Cash flow1/1/2022 -3210.002/1/2022 -1710.003/1/2022 -1710.004/1/2022 -3210.005/1/2022 -1710.006/1/2022 -1710.007/1/2022 -3210.008/1/2022 -1710.009/1/2022 -6751.2110/1/2022 -10589.8411/1/2022 -11593.3512/1/2022 -11837.041/1/2023 -6501.982/1/2023 -5001.993/1/2023 -5001.994/1/2023 -6501.995/1/2023 -5001.986/1/2023 -5001.997/1/2023 -6502.008/1/2023 -5001.999/1/2023 -5001.9810/1/2023 -6501.9911/1/2023 -5001.9912/1/2023 -4977.991/1/2024 -6752.002/1/2024 -82074.393/1/2024 -77311.364/1/2024 -6751.995/1/2024 -5252.006/1/2024 -5251.997/1/2024 -6751.998/1/2024 -5252.008/30/2024 393150.74XIRR(J2:J34,I2:I34,0.07) 23.51%That returns 0.2351 which I believe corresponds to 23.51% ARR but that seems ludicrous. The Date column is formatted as a Date and the Cash flow entries are formatted as a Number. I've checked the data and besides his larger than usual deposits in 2024 I don't see anomalies or a duplicate entry. It's been a while since I used Excel and I haven't used XIRR before; where have I gone wrong? I think 23% is roughly the return over the lifetime of the account so either I'm misusing XIRR or I've misunderstood what it does.