Calculate ROI or Rate of Return if stock purchased after Jan. 1

Don Awalt

Why is it, that if I purchase a stock after January 1 in a given year, the investment/performance reports show any of the columns of ROI or rate of return as "N/A" until January 1st of the next year?

Quicken should update their software to calculate this, they must be using some simple formula that doesn't work if the stock was not on hand Jan 1. It's not that hard to calculate, without this it renders the performance reports totally useless because the results are incorrect (updating position for a given stock is also wrong, but that's an explanation for another day. If they truly fix this to properly calculate ROI and rate of return they will all be fixed.)

q_lurker

First of all, this Q and A still applies.  It is a decision Quicken programmers made generations ago.  If there is no holding at the beginning of the period, show NA.  

Second, it is not really a January 1st issue.  There are 5 ROI% fields available in portfolio views.  Four are tied to obvious specific time periods - YTD, 1-, 3-, and 5-year periods.  The same apparent rational is in place for those four -- if the security is not owned at the beginning of the period, Show NA.  

Third, the interrelationship between Return, Amount Invested, and ROI% should not be forgotten  ROI = Return / (Amount Invested).  The crux if this issue is that Quicken is treating AI as NA (or more accurately, 0) if there is no holding at the beginning of the period.  The division by zero leads to the NA.  

Fourth, Average Annual Return is a separate, distinct calculation not dependent on Amount Invested as a denominator.  Yet, in the portfolio view, those available values (YTD, 1-, 3-, and 5-year) are similarly limited to NA when the security was not owned at the beginning of the period.  Decision by Quicken programmers long ago.  (I am not clear if your reference here to "rate of return" is referring to Average Annual Return.)

Fifth, these behaviors in portfolio views are not tied to behavior in Investment Performance reports.  While those reports may include a caution about computed values over short periods of time, the reports will compute values subject to a limit of something like 1,000% average annual returns.  Investment performance reports also use only the Average Annual return calculation; they do not use ROI% equations.  

Finally, that fifth ROI field that can be displayed (ROI% - no time period clearly specified).  The applicable time frame for that version of ROI is under the portfolio Options selection for Portfolio Preferences.  There the user can specify a starting date for the return calculations (Earliest date, or a specified date).  When going that route in QW2017, you can choose, for example, 1/1/2017 as the starting date and then get apparently valid Amount Invested, Return, and ROI% figures.  That is, for that column, the owned-at-the-beginning requirement does not come into play.  

I cannot recall if that freedom with the ROI% and the beginning date was evident in versions prior to 2017.  I was pleasantly surprised to see that behavior as I investigated your question.  So there is your work-around.  Since the other four ROI filed have specified time frames, they are not affected by a change in the portfolio preferences setting.

HTH

NotACPA

@Don,
What you're really asking for is "ROI for the period that I've owned this security". 

You might try suggesting that as an Idea (this thread is listed as a Problem ... which it isn't)

Don Awalt

Thanks @q.lurker, option 5 was exactly what I was looking for!

q_lurker

Don Awalt said:

Thanks @q.lurker, option 5 was exactly what I was looking for!

@Don:  You are welcome.  

It would serve you well to develop a clear understanding of how Amount Invested is determined and managed within Quicken as that is key to the ROI calculation.  Specifically, as you sell off holdings, the Amount Invested is not reduced by the sale.  The parameter is not zeroed out until all shares are sold, and even then, it seems to be a bit tricky.  That behavior can have an impact on how meaningful ROI is as a performance measure.