Disclosures and Caveats: Date Calculations

Disclosures and Caveats for Investment Return

With any computing product, assumptions have to be made and calculations carried out. It is the intent of Investment Return to be as educational and open about how Investment Return works as possible, without revealing the inner workings to competitors. Below are the known Disclosures and Caveats for Investment Return.

Date Constraints and Holding Periods

Inv. Return and Dividend Date Constraints: The internal iPhone/iPod function used to calculate the difference of day between two dates does not allow dates before 1/1/1972. Therefore no dates before 1/1/1972 are allowed as Purchase Date or Sale Date in Inv. Return and Dividend.

Number of Days in a Year: Investment return calculates Holding Periods and Time to Retirement in days. This calculation of days is very accurate and includes 2/29 on leap years. The date pickers you are presented with accurately present 2/29 in leap years. Most people think of returns in annual terms so daily returns have to be converted to annual returns. Since Investment Return includes days for leap years in its calculations it was decided that the most accurate conversion factor for daily returns to yearly returns is 365.25, not 365. A 365.25 conversion factor results in the most accuracy most of the time. However, there are Holding Periods and Times to Retirement that interact with leap year days and will result in very slight inaccuracies (less than 1% of 1%) when converting to an annual return or in computing your retirement future value.

Holding Period/Days to Retirement Assumptions: The holding period assumption for Inv. Return and Dividend is that you owned the investment at the start of the day that you input as Purchase Date, and that you sold your investment at the end of the day you input as Sale Date. So if you input 1/1/2000 as your buy date and 1/31/2000 as your sell date, Investment Return would say your holding period was 31 days, not 30 days (31-1). Similarly in the Retirement calculator, the current day is included in computing your days to retirement, and you are assumed to retire at the end of the day you specify as your retirement date. So if today was 1/1/2010 and you input 12/31/2010 as your retirement date, your retirement assets will be assumed to earn interest for 365 days.

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