In an earlier post, I mentioned that I use XIRR as one of the metrics for measuring the individual stocks performance in my portfolio. In simple terms, XIRR is the interest rate you would need to make the same money from any interest bearing account (with same investments). While XIRR can be extended at portfolio level, in today’s post, I am only discussing how I use XIRR at individual stock level.
I have pulled out one excel sheet [copy is in my toolbox at TIP-Stock-Tracker] as a representative example for this discussion. The primary notion behind this excel sheet is to keep records and track the performance. It is not intended “to model an automated tracker” or “to perform any automated calculation across the board”. Except XIRR, I have used only few basic math formulas like addition, subtraction, divisions, multiplication, and percentages. In order to understand the formula, I suggest to use formula auditing tool bar (which will show arrows to linked cells) to understand the formulas. This excel is segregated into different regions.
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