FAQ

FAQ

Birdee Portfolios

How come I can have positive gains and negative returns? Or the opposite?

If you are faced with having positive earnings (€) and negative returns (%), or the opposite, do not worry. Even if it sounds wrong, it is quite correct! Returns are calculated separately from contributions and withdrawals. If your return is positive, it is because your portfolio has increased in value since your first investment. Conversely, if your return is negative, it is because the value of your portfolio has decreased since your first investment.


If your monetary gains are negative, it is because you deposited the majority of your investment just before the value of your portfolio fell. Conversely, if your earnings are positive, it is because you deposited the majority of your investment just before the value of your portfolio increased.

 

For example:
I make an initial payment of €1,000 on the first day. Imagine that the market performance is 20%. My portfolio will gain value to reach €1,200. On this good news, I invest € 10,000 more, and my portfolio reaches a value of € 11,200. If the markets now fall by 10%, I will lose more money (€1,120) than I had previously gained (€200). Thus, my total gain is negative (-€920) even though the performance of the market (hence the return of my portfolio) remains globally positive: (1+20%) * (1-10%) -1 = +8%. The conclusion is that my gains (expressed in €) is dependent on my investment timing, while my portfolio performance (expressed in %) remains unaffected by my investment decisions.

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