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1
Announcements / Blog Post - Putting Performance Into Perspective
« on: June 02, 2020, 02:22:43 PM »
The year 2019 was a great run for the S&P 500 Index. Its 12-month total return of 31.49% was more 3x higher than its 50-year average annualized return of 10.60%. All good, right?

read more: https://www.investmentaccountmanager.com/products/putting-performance-into-perspective/

2
Support / Re: Inaccurate IRRs
« on: June 02, 2020, 02:18:34 PM »
Looks as if you are misunderstanding...  if you receive dividends, these are positive cash flows that contribute to the IRR calculation.  If you reinvest these dividends, then in addition to the income component on IRR, so too will be the change in value of the reinvestment.  The formula used for IRR is below, an it is accurate and correct.  We also further geometrically link IRR for sub period returns and closer GIPS compliance.  Please contact our tech support team directly if you have add'l questions: techsupport@investmentaccountmanager.com

Internal Rate of Return (Modified IRR Method)

The internal rate of return calculates return for the period taking into effect the exact timing of each cash flow. The model properly weights the timing of cash flows (additions/ withdrawals) for a portfolio or an individual asset, for a selected date range, to provide the return calculation. Internal rate of return can be equated to the compounded effective interest rate that a savings account would have had to earn in order to reach the portfolios' current present value including all investment flows (purchases, sales, income, interest, reinvestment, etc.), while adjusted for timing of the specific flows.

Key variables in the model include: Beginning Market Value, Ending Market Value, Income, Reinvestments, Sum of all Cash Flows within the period (additions/withdrawals), and Weight Factor (# of total days in the period that the cash flow "F" has been in, or out of, the portfolio). The return derived here can then be stored to be used in 'linking' returns.

The calculation is:

MVE = Summate Fi(1+R)^Wi

(^ denotes raised to the power of)

where:

MVE = the market value at the end of the period (includes any interest or dividends earned but not withdrawn, i.e. reinvestments, etc.).

MVB = the market value at the beginning of the period, (includes any interest or dividends earned but not withdrawn, i.e. reinvestments, etc.).

Summate F = the sum of the cash flows within the period (contributions to the portfolio are positive flows, and withdrawals or distributions are negative flows). The market value at the start of the period is also treated as a cash flow at the beginning of the period, i.e. MVB = F0.

R = the internal rate of return.

Wi = is the proportion of the total number of days in the period that the cash flow Fi has been in (or out of) the portfolio. The formula for Wi is:

   Wi = [CD-Di] / [CD] (this is the weighting component)

   where:

CD = the total number of days in the period.

Di = the number of days since the beginning of the period in which cashflow Fi occurred.
 
IRR is derived by selecting values for R and solving the equation until the result equals MVE. For example, if there were a total of three cash flows for the period (including the beginning market value treated as F0) - there will be three terms in the computational formula:

MVE = F0(1+R)^W0 + F1(1+R)^W1 + F2(1+R)^W2 .

The first term deals with the first cash flow, F0, which is the value of the portfolio at the beginning of the period (MVB). Wi is the proportion of the period that the cash flow Fi was in (or out) of the portfolio. Because F0 is in for the whole period, W0 = 1. The larger the value of Fi in the term, the more it will contribute to the total. But the smaller the exponent (i.e., the value of Wi), the less the term will contribute to the sum. This usually means that the first term, with a large F0 and W0 = 1, will contribute far more than the other terms.

Source: Global Investment Performance Standards Second Edition (2006),  Charlottesville, VA 22903, pg 87-88.





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What’s the key to making good investment choices? It isn’t necessary to understand the inner workings of the securities markets or the mathematical economies underlying investment theory.  Instead, 10 axioms of effective investing provide the critical cornerstone for guiding investment philosophy and making decisions. This will ensure that you meet the universal goal of creating financial wealth for retirement.

read more: https://www.investmentaccountmanager.com/products/reach-your-retirement-goals-by-following-10-basic-axioms/

4
Reporting / Re: net of fees performance reporting
« on: April 30, 2020, 05:58:58 AM »
Both IAM Individual and IAM Professional will include in the performance calculations any expenses/fees occurring within the time period, as well as all other investment flows.

If any add'l questions, please contact our technical support team:

techsupport@investmentaccountmanager.com


5
Announcements / Blog Post - Dollar Cost Averaging
« on: April 01, 2020, 08:30:24 AM »
As evident with the recent volatility in the stock market, investing inherently involves some risk – that’s just the way life works. Our job as investors is to figure out ways in which to minimize this risk.  One common method that investors use to minimize risk is dollar cost averaging (DCA).  Dollar Cost Averaging offers a strategy for investors to gradually increase their stock market exposure for potential long-term upside results, while taking into account the whipsaw nature of current market conditions.

https://www.investmentaccountmanager.com/products/dollar-cost-averaging/

6
Transactions / Re: IRA transactions
« on: March 31, 2020, 01:02:33 PM »
Linda, you still can use the sale function to record this activity, with the MMF offset.  You just will not report that to the IRS for capital gains for your IRA.  If any add'l questions, please let us know. You can reach our support team directly using this email:

techsupport@investmentaccountmanager.com

Matt

7
General Discussion / Re: Mkt Price Taxable Bonds
« on: March 22, 2020, 08:44:38 AM »
Bob, under the asset library menu | current asset library | select the bond, then the edit tab, to update the market price.  If you have add'l questions, please let us know, you can email us directly at:

techsupport@investmentaccountmanager.com

Matt

8
Announcements / Blog Post - Concentrated Investment Positions
« on: March 03, 2020, 09:31:36 AM »
With the recent runup of stock market levels over the past several years, many investors might find one or more of their investment holdings have appreciated considerably in value, now representing a disproportionate percentage by market value. With this in mind, it is important for investors to pay attention to these concentrated investment position(s), an important investment concept that often is over-looked for proper portfolio management....

https://www.investmentaccountmanager.com/products/concentrated-investment-positions/

9
Announcements / Blog Post - Benchmarking: The Art of the Science
« on: February 01, 2020, 09:15:47 AM »
As found in the Merriam Webster dictionary the term “benchmark” has the following definitions:

> a mark on a permanent object indicating elevation and serving a reference in topographic surveys and tidal observations.

> a point of reference from which measurements may be made.

These definitions clearly suggest that a benchmark serves as a point of reference. The real key here—in the world of investments—is selecting a performance benchmark that is similar to the portfolio being measured against it. This often does not happen, which is why performance benchmarking so often is sheer lunacy.

https://www.investmentaccountmanager.com/products/benchmarking-the-art-of-the-science

10
Announcements / IAMv3 Individual Update 3.1.9 Available
« on: January 23, 2020, 10:01:43 AM »
Investment Account Manager v3 Individual - Maintenance Releases 3.1.9 Now Available

Use the choice 'Check For Updates' located on the IAMv3 Individual Version Menu Bar to automatically verify you are currently running the latest version of Investment Account Manager v3 Individual. You will be notified as to whether or not you have the current version. If not, you will be prompted to download the latest file.

Note: if this choice is inactive in your copy of Investment Account Manager, this indicates your support period has expired. To extend technical support for an additional year, renew thru our website Shop page: www.investmentaccountmanager.com.

If you have any questions, contact our technical support team: techsupport@investmentaccountmanager.com

Click here for a listing of improvements/changes/corrections included in IAMv3.1.9:
https://www.investmentaccountmanager.com/maintenance-release.php

11
Announcements / Blog Post - Defining Your Investment Objectives
« on: January 02, 2020, 12:30:14 PM »
With the start of 2020, now is an ideal time for investors to review their forward-looking investment objectives, understanding these objectives are affected by short- and long-term needs and changing requirements....

https://www.investmentaccountmanager.com/products/defining-your-investment-objectives/


12
Announcements / Blog Post - Save and Invest
« on: December 02, 2019, 08:51:07 AM »
Saving is a key principle. People who make a habit of saving regularly, even saving small amounts, are well on their way to success.  It’s important to open a bank or credit union account so it will be simple and easy for you to save regularly.  Then, use your savings to plan for life events and to be ready for unplanned or emergency needs.

https://www.investmentaccountmanager.com/products/save-and-invest/



13
Transactions / Re: GE Spinoff of GE Transportation
« on: November 29, 2019, 09:51:35 AM »
If you contact the investor relations division on GE's website, they will provide the proper share ratios and cost basis allocations.  Once you have this information, with proper market prices on the date of the spinoff, you can enter this under the IAM Transactions Menu | Global Transactions | Spinoff function. If you have add'l questions, please contact our technical support team: techsupport@investmentaccountmanager.com

Matt

14
Support / Re: Unable to post transactions
« on: November 26, 2019, 08:51:04 AM »
First off, verify you are using the latest v3.1.8 of Investment Account Manager.  Then once you have updated to this latest release, use the tools menu | rebuild data choice.  Then see if the issue is corrected for you.  As necessary, please contact our technical support team directly using this email address: techsupport@investmentaccountmanager.com

Matt

15
Transactions / Re: Spin off with multiple tax lots
« on: November 21, 2019, 08:36:09 AM »
When adding multiple spinoffs, these are entered in sequential order.  That is, determine the proper cost basis allocations post the spinoff for each company (parent and spinoffs received).  Then determine the % allocation this cost basis represents of the original parent.  When entering, make sure you adjust the percent allocations for each subsequent spinoff so the resulting tax basis assigned is correct for each company.  Refer to the help topic provided in IAM3 regarding multiple spinoffs for a working example you can follow.  If you have add'l questions, please email our technical support team directly: techsupport@investmentaccountmanager.com

Matt

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