XIRR (in Excel spreadsheet) could be used to measure the performance of our Stocks Investment. Explanation on how to use can be found at,
http://office.microsoft.com/en-gb/excel-help/xirr-HP005209341.aspx
To calculate XIRR for our Stocks Investment on an annual basis, I copied all my transactions to a worksheet as follows,
1 Jan 12 : + (Mkt Value of All Stocks on 31 Dec11)
Dates : + (Buy Transactions)
.
.
Dates : – (Sell Transactions)
.
.
Dates : – (Dividends)
.
.
31 Dec 12 : – (Mkt Value of All Stocks on 30 Jun 12)
Dates above means each individual date and the corresponding value of transaction. There's no need to arrange the transactions in Time order as XIRR will sort it our for us.
Note that I used 31 Dec 12 as the end date (even tho' the Mkt Value is for 30 Jun 12) as I wanted to get a comparative figure to benchmark against STI. Using 30-Jun-12 as the End Date would annualise the figures and would give ~2x the STI benchmark.
Results
2011 : XIRR = -7.58% vs -5.81% (my own non-scientific method) vs STI = -17.04%
2012 : XIRR = +21.77% vs +17.27% (own method) vs STI = +8.77%
2011 till end Jun-12 : XIRR = +7.83%
It looks like my own method is only conservative when I have +ve returns. When I have -ve returns (like 2011), it's no more conservative!