Lifetime Overview CAGR calculation wrong

bbuckley

The CAGR calculation seems to be wrong. I import the Lifetime Overview from 1/1/2013 to TODAY and then use an excel formula as a cross check. The formula I'm using is: =POWER(ENDING VALUE/BEGINNING VALUE,1/(YEARFRAC(ENDINGDATE,BEGINNINGDATE,3)))-1.

The difference is pretty significant 10.13% vs 13.34%. Am I missing something or is the calculation wrong?

Jim_Harman

[edit after more research] Your formula assumes there were no transfers in or out during the analysis period and any distributions were reinvested. Is that the case?

Also I did a simple test case using an account that had no transfers in or out during the 3-year period and it appears that there is something wrong with Quicken's CAGR calculation - specifically that the first year is not included. In this case the CAGR should be ((28109/21066) ^ (1/3)) -1 or 10.09%.

Quicken's number is 25.64%, which is ((28109/17808) ^ (1/2) -1

bbuckley

Sorry about the double post…

bbuckley

Sorry it took so long for me to reply… life…

I think the formula is independent of transfers in/out as long as they are accounted for in the beginning and ending balances. I could be wrong though… it happened once.:)

For example if you want the annual growth rate (call it CAGR) of net worth you simply use the beginning net worth and the ending net worth and the beginning and ending dates.

1-Jan-22	31-Dec-24	Example
150,000	300,000	150,000	100.00%	25.97%
	188,948	12/31/2022	Leap Year
	238,010	12/31/2023
	299,810	12/31/2024

See the example above, the 12/31/2022 ending amount is off by a "Leap Day" sinc ethe CAGR formula is based on 365 days. Am I off base?

In any event as you point out it appears the calculation is in error any way.

Bruce