One of the things I calculate for each account is its total return; which seems pretty simple: [end (or current) value] / [total invested] -1

However, I have a few accounts where I have withdrawn more than the total amount I invested into the account (possible because returns have been positive). In this scenario, the formula above does not work because the âtotal investedâ is negative.

When this happens in my Investment Returns template, I say the return is â. But, this bugs me so I have been looking for a better answer. I have done a Google search on this but havenât found anything helpful.

Would love to hear your feedback. If there is an article that explains, please point me to it.

I realize this is not really a Tiller topic, more like Seeking Alpha; but thought I would try Tiller first.

Thanks. I use XIRR to calculate average annual return since opening for each portfolio. I think this is the best metric to determine return of a portfolio.

I was trying to figure how to calculate TOTAL return for the portfolio. I did a bunch of playing around and have decided to keep the total return as â if you have withdrawn more than your total deposits.

Wouldnât the XIRR formula still be an accurate way to calculate the Annualized Return even if youâve withdrawn more than your initial investment thanks to positive returns on your initial investment?

In the example below over a 2 1/2 yr period, investments have been $110,000. Withdrawals have been $128,000 and the final balance is $30,000. XIRR annualized return = 40.67%

As you mention, XIRR is annualized and that one is easy.

For Total return, there are a few cases where what is the most logical formula (at least to me), [end (or current) value] / [total invested] -1, does not work. Here are 4 scenarios, and I included your suggested formulaâŚ

If Iâm understanding your top left calc, youâre saying you lost money even though you took out more than you invested ($50,000) and still have $5,000 in the account.

Using your top left example âŚ Iâd say your total investment was $50,000 turned into $60,000 over a 5 month period. The total amount you got back from your investment is $55,000 (withdrawals) + $5,000 (final value) = $60,000 or $10,000 more than you invested.

So, your Total Return would be 20% ($10,000 gain on $50,000 investment). The annualized return (IRR) would be 172%

It seems like youâre counting your withdrawals as additional investments rather than returns. Is this because youâre counting them as you would dividends that youâre reinvesting? If so, I donât think that approach gives you a realistic way of looking at the return on your investment of $50,000.

As I see it, if your withdrawals + ending balance are more than your initial investment + adds, youâre Total Return has to be positive.

Going back to your Total Return Formula (withdrawals + current value)/Total Investment, your âTotal Investmentâ is the sum of all the deposits, correct? I have been hung up on Total Investment = Net Invested (Deposits - Withdrawals). Using this, here are the updated tables, where the total return makes a lot more sense!