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Funds 506: Calculating Your Fund's Personal Rate of Return

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1.
If your personal rate of return for a fund is much lower than the return reported by your fund company, you should probably take a look at _______.
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When you've been buying and selling. Your timing probably accounts for the difference.
2.
Why does your personal rate of return matter?
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Because it helps you to evaluate how your portfolio and individual funds are performing. Knowing your portfolio's actual returns can help you determine whether you're on track to meet your investment goals and whether your funds are living up to your expectations.
3.
Your personal returns in a fund would not match the fund's reported returns if you were investing your money on a different schedule from the one the fund assumed.
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True. Reported returns assume lump-sum investments at certain times, such as the first of the year. But if you are investing money throughout the year, your return will differ from the reported return.
4.
In order to calculate a fund's personal returns for a single year, you need all but which of the following?
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None of the above; you need all of them. All of these are necessary when calculating a fund's personal returns for a single year.
5.
Why might your personal returns in a fund not match the fund's reported returns?
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You didn't invest in the fund at the start of the period that the reported returns cover. Reported returns are based on lump-sum investments over specific time periods. If you use dollar-cost averaging or if you invest in a fund at any other time than at the start of the period, your personal returns will differ from the reported ones.