Performance Appraisal Tools

Necessary in a performance improvement plan!

The use of performance appraisal tools is an important way of determining the success or otherwise of my performance improvement plan.

The best performance appraisal tools include Excel worksheets that use the IRR formula to facilitate this process.

Measuring Performance

I record buying and selling information for each share in a separate Excel worksheet together with the current (calculated) internal rate of return (irr) for that share.

The irr for the overall portfolio is calculated in another worksheet which is linked to the worksheets for each share and incorporates the performance for each share.

I also set up a summary worksheet for the portfolio to list all the stocks in the portfolio together with the number of shares held, the current price, the total value of each holding and the percentage that each stock represents in the portfolio.

The summary worksheet contains a cell with the current date. This date is linked to each share worksheet and when the date is changed, the irr for each share is re-calculated to reflect the increase in time for which the share has been held.

I print out the summary worksheet for the portfolio at the end of each financial year for comparison with previous years and aim for the doubling of the portfolio value every four to five years.


Reviewing the Investment Plan

The investment plan is not set in stone as I review it every two to three years.

This review includes consideration as to how closely my buying decisions and selling decisions (if any) have conformed to the stock investment plan, as indicated by the investment diary that I keep.

Having a performance improvement plan provides me with a powerful benefit by enabling me to measure my ongoing success in implementing the plan.


Using Excel Worksheets

Excel worksheets provide a time-saving way to measure performance of the portfolio by means of internal rate of return calculations.

Worksheets that measure the performance of individual shares and the overall portfolio using the irr formula, and that can be adapted for your portfolio, may be obtained for free on request by contacting me directly.

Further details relating to these worksheets may be obtained in the internal rate of return section of this website.


In Summary

By using performance appraisal tools to measure the performance of individual shares as well as the performance of the overall portfolio, I am in a position to monitor the level of success of my investment plan.

Excel worksheets make this task much simpler than would otherwise be possible.

These performance evaluations also inform my value investing stock selling strategy.

Without these tools, I would be unable to judge whether I would be better off using fixed income products to provide a better income.

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