How is investment growth calculated when you've withdrawn all your initial investment?

UK Monzo Chat
1

Looking at the investment performance section, the %age growth seems to be the change in value of the investment divided by the amount invested.

Say I invest £1000 and within a couple of years that has doubled in value to £2000, and then I decide to withdraw £1500 to spend but keep £500 invested. At this point I’ve now invested **-**£1500. If my investment gains value by a further £75 is this now calculated as a -5% growth, i.e. a loss?

2

I don’t know specifically how Monzo does it, but it’s common for financial services companies to use something known as a Time Weighted Rate of Return that adjusts for the sort of changes you are thinking about.

More details here:

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3

Interesting reading, thanks!

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4

The XIRR function in your spreadsheet app will also be able to take irregular cash flows and dates like this and work out your average rate of return.

(I also don’t know how monzo are calculating it)

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