After some help.
If you put money into a Monzo investment stocks and shares pot it shows you how it’s doing as a percentage. If you keep irregularly adding more to that pot, how does it work out the percentage?
Eg if that pot says it is up 5% after ten different top-ups, then how is that 5% calculated?
Thanks in advance
That’s the return on investment, the amount of money in the pot doesn’t affect what the rate of return is. So adding money won’t change that percentage.
If you put in £5k and made 5%, then add another £5k, it will drop to showing 2.5% (I’m rounding for simplicity here) because it adjusts it based on current total balance.
What we actually want is called ’Time weighted return’ which is return on the money, taking into how long ago each deposit was made.
The way it’s currently shown is completely useless unless you only ever make 1 large deposit and then never touch it.
Which means unfortunately isn’t the case
Okay yeah that’s what I thought was happening. So really, I have no idea how this pot is doing.
Thanks for confirming anyway.
Seems like something they need to review because it’s misleading.
Okay, in this case I’m either making more or less than I thought and I’m too tired to work out which. I’ll check that out tomorrow, thanks for the correction!
I have a Hargreaves Lansdown SIPP and S&S ISA, along with a work pension elsewhere, and they also don’t calculate time-weighted return.
It’s a big frustration of mine and I’m intrigued which platforms do actually calculate this for you.
I sat down last weekend and went back years trying to work out all my historical contributions versus current value.
In addition, I find with HL that if you sell some holdings and reinvest, the gain/loss is calculated against your ‘cost’ rather than contributions, so you can quite easily wipe out your gain/loss just by shuffling things around - not in the slightest bit helpful.
I’ve put in 100 quid over the last year and I’m five quid up. That’s pretty easy for me to calculate.
And the app tells me I’ve got a 5% gain.
What’s useless?
Obviously that’s not accurate compared to a fixed 100 pounds investment but it’s easy to see that’s a decent return from a starting point of zero.
I’m in the process of transferring my Monzo S&S ISA to T212 and I’m conscious of that too. I’m going to have to start keeping a spreadsheet to track historical gains/losses, which seems ridiculous!
I think someone produced an automated way of doing TWRR on T212, which I keep meaning to look into but keep putting it off as I hope T212 will do It eventually.
If you put the £100 in 12 months ago in one lump sum and it’s up 5% then your return is indeed 5%. However, if you put it in monthly over the 12 months then your return is more like 10%.
Absolutely.
Because the scenario you’ve described is literally the only situation where the figure will be accurate.
As soon as you make 2+ deposits, the figure becomes inaccurate.
Say I put in £1000 in January to test the waters, and over 6 months I make £100, that would be 10%.
In August I then decide to deposit £10,000. Bringing my total portfolio to £11,100 including the original deposit and subsequent gains. At that point, although my £100 gain hasn’t gone anywhere, my account would now be showing a percentage gain of 0.9%.
Not exactly a useful metric is it?
I would also be more happy with a simple “how much did this fund change this month”, which is independent of how much you have invested. You can look up the fund performance on other websites to see this, but it isn’t easy.
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