This blog article explains in greater detail how to determine stock portfolio performance based on units of NAV (Net Asset Value). I made a similar blog article before (Calculate your stock portfolio performance with Net Asset Value based on units in excel) and the questions I got from that article are answered in this article.

Day 1 - Deposit money

Today you deposit $100 000 to your account. In this example I use a 1000 NAV units but you can use any number you like here. NAV / unit is $100 000 / 1000 = $100

NAV calculations - Deposits

Day 2 - Buy a stock

On the next day you buy 50 Google shares and they cost $1000 each. You pay $10 in commission. You now have  $100 000 - 50*$1000 -$10 = $49 990 in cash in your account. The stock is worth $1000*50 = $50 000. Your account balance is $50 000 + $49 990 = $99 990.

You have 1000 NAV units and the NAV / unit is now $99 990 / 1000 = $99.90.

Portfolio performance is 1 - 99.9/100 = -0.1%. Why did the stock portfolio decrease in value? You paid $10 in commission.

NAV calculations - buy stock

Day 3 - Withdrawal

Google share price is today $1010. Your stocks are now worth 50 * $1 010 = $50 500. You have $49 990 in cash and your account balance is $50 500 + $49 990 = $100 490.

NAV / unit is $100 490 / 1000 = $100.49. Portfolio performance is 1 - 100.49/100 = 0.49%

You have $49 990 in cash and you have decided to withdraw $20 000 from your account. The cash is now $49 900 - $20 000 = $29 990. A deposit or withdrawal affects your NAV units. How many NAV units?

$20 000 / $100.49 is approximately 199.02 NAV units. 1000 - 199.02 is approximately 800.98 NAV units.

NAV calculations - withdrawal

Despite the fact that the account balance is lower than before, your stock portfolio performance is up 0.49% from day 1.

Day 4 - Dividend

You receive a dividend $10 per share. 50 * $10 = 500. Your cash is now $29 990 + $500 = $30 490.

Your Google shares are now worth $1 007 per share. 50 * $1007 = $50 350. Your account balance is $30 490 + $50 350 = $80 480

Dividends affect NAV / unit. NAV / unit = $80 480 / 800.98 is approximately $100.48

NAV calculations - dividend

Day 5 - How is your stock portfolio doing today?

Google is now at $1050. $1050 * 50 = $52 500. Your have $30 490 in cash. $52 500 + $30 490 = $82 990.

$82 990 / 800.98 is approximately $103.61. Your portfolio is up 3.61%

NAV calculations - stock portfolio update

Day 6 - Deposit $20 000

Google is now at $980. 50 shares * $980 = $49 000. Your have $30 490 in cash.  $49 000 + $30 490 = $79 490. NAV  / unit is $79 490 / 800.98 = $99.24. Your portfolio is down -0.76%

Deposits affect NAV units. $20 000 / 99.24 is approximately 201.23 NAV units. 800.98 + 201.23 = 1002.50 units

You now have $30 490 + $49 000 + $20 000 = $99 490

NAV calculations - Deposits

Day 7 - Sell stock

Today you sell Google stock at $1100. 50 shares * $1 100 = $55 000. You have $50 490 in cash - $10 in commission + $55 0000= $105 480.

Selling a stock affects NAV / unit.  $105 480 / 1002.50 is approximately 105.22

NAV calculations - sell stock

Your portfolio is up 5.22%

Day 8 - Short selling a stock

Today you sell 100 shares of Caterpillar at $70. $105 480 -$10 = $105 470. NAV / unit is $105 470 / $1 002.50 = $105.22

NAV calculations - short selling a stock

Your portfolio is up 5.21%

Day 9 - How is your stock portfolio doing today?

Caterpillar is at $71. $70*1000 - $71*1000 = -$1000. $105 470 - $1000 is $104 470

NAV calculations - NAV

$104 470 / $1 0002.50 = $104.21. Portfolio is up 4.21% from date 1.

Day 10 - Repurchasing stock

Today you repurchase 1000 shares of Caterpillar at $60. $105 470 + $70*1000 -$60*1000 -$10 = $115 460.

$115 460 / $1002.5 = $115.17

NAV calculations - repurchasing stock

The stock portfolio is up 15.17% from start.

Remember

  1. Deposits and withdrawals change NAV units
  2. Stock value, dividends and commissions change NAV / unit

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Download example file *.xlsx

NAV calculations.xlsx