I've been paying into my pension monthly for 8 years and would like to work out what the investment growth rate has been. I'm sure I've done it wrong, as I came up with an answer of 10% but I'm sure that's too high.
I know
(1) how much i've paid in every month since I started
(2) the actual valuation in March every year
My steps were:
for every year:
(1) (current year's valuation) - (current year's contributions) - (previous year's valuation) = (investment growth amount)
(2) (investment growth amount) / (previous year's valuation) = (investment growth rate)
then
(3) take an average of all the growth rates worked out in (2)
You will probably laugh at my step (3) - it feels slapdash even to me.
But there must be a more correct way of doing it based only on knowing the dates and amounts of all the contributions, and the latest valuation?
Of course, none of the online calculators on pension company websites are any help. They are more interested in calculating what the retirement income I'll get based on their mythical 7%.
Thanks in advance,
tl
I know
(1) how much i've paid in every month since I started
(2) the actual valuation in March every year
My steps were:
for every year:
(1) (current year's valuation) - (current year's contributions) - (previous year's valuation) = (investment growth amount)
(2) (investment growth amount) / (previous year's valuation) = (investment growth rate)
then
(3) take an average of all the growth rates worked out in (2)
You will probably laugh at my step (3) - it feels slapdash even to me.
But there must be a more correct way of doing it based only on knowing the dates and amounts of all the contributions, and the latest valuation?
Of course, none of the online calculators on pension company websites are any help. They are more interested in calculating what the retirement income I'll get based on their mythical 7%.
Thanks in advance,
tl
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