Portfolio Calculator

This calculator illustrates how while shares within a portfolio may perform with huge variation, the portfolio is much more consistent.

To use this calculator in a compliant fashion you must put it into an article that is explaining these issues. It should not be used in such a way that a client might think that it represents a real portfolio. You will probably need to change the text to fit your article. I have left it simply for information for you.

Company
Growth% (-loss) each year
 Final fund Average annual growth
 
1
2
3
4
5
6
7
8
9
10
GHY
UYT
KK
GFD
YTR
UUU
JHT
REW
QWE
RTY
JHG
OIU
YTR
TRE
POI
UIK
YHB
TGV
EDC
WSX
WSV
PLM
MLP
OKM
IKM
KJU
RFV
BVC
MNB
ZXC
VVC
ASD
FDS
KJH
NXX
CFR
JYD
JHL
EED
BGF

You can see that the results vary very widely. It is in fact impossible to predict which company will do best, and which you should avoid.

The calculator works in a very simple way, and treats all companies the same. It works like a dice with ten sides. If it comes up with sides 1-4, the share grows by 3% that year. Sides 5-8 and it grows by 20%. Side 9 and it grows by 50%. Side 10 and it loses 35%. It does this for every share for every year. Over 10 years this produces very wide variations in the final fund value for each stock.

Investment Portfolio Management is about trying to avoid that variation, and the easiest way to do it is to not try and pick the winner, but simply spread the investment across all the shares. This will produce a much more consistant, and predictable, gain for the portfolio. Try it, press Compute a few times and see how the Spread Investment Fund performs, in money terms and Average Annual Growth terms.

Spread Investment Fund (the £1000 split to £25 in each of the 40 companies shown)- Fund Value Average Annual Growth