[squiffy]

This is the type of question I have had. I actually took a Finance Theory class in law school, but don't remember covering a problem like this.

It's obviously easy if you have only one deposit. The multiple deposits make it more complicated.

Three possible approaches.

First, just make several simplified calculations. They won't be precise, but may be close enough for government work. For example, take the total profit and divide by the total amount invested and adjust so that you get an annual rate. This will be clearly incorrect, but is a rough guide. You will always be undercalculating the actual return because the recent deposits have not really had much time to work.

Second, you can ignore the return for the most recent deposits and only calculate return for deposits held six months or longer. So say you have actually deposited 2600. But you will only calculate return on money held for 6 months and profit thereone.

Third, calculate a separate return for each deposit.

By making multiple calculations, you tend to get pieces of the big picture. Like photographing an elephant from 10 different directions.

We can discuss this more. It's hard to discuss by posts. Wish we had a class we were all taking.

I face this same problem when I invest in stocks and make multiple purchases over time.

Say you buy 1000 shares of NOK on Sept. 1. And after one month they have appreciated 1%.

Your actual return is 1% in 30 days. And your actual profit is say $500. I think that these are the most important figures.

Many programs like quicken translate this into an effective annual rate. But this is really artificial and potentially unhelpful.

IF the stocks keep appreciating at 1% a month (that's a big if), then your annual rate is 1% a month for 12 months or 12% per annum. But do you see how that is probably an artificial overestimate of your true return? The only way to know your true annual return is to wait one year, then see how much those stocks have gone up, or gone down. You might end up losing money over 12 months!!!!!

So the most accurate would be.

I deposited $100 on Jan. 1. Over 6 months it earned x%.

Another problem, is that it is hard to figure out what proportion of the interest was earned by each $100 deposit. You can figure it out. But it's really not worth your time.

So easiest is to say, as of Sept. 1, I have deposited $2600 and since Jan. 1 I have earned $100 in interest, which is so much % of the 2300 which has been actively earning interest.

Just try to record factually, each month, what is happening to the money. Then analyze it.

The most meaningful adjustment would be to temporarily ignore those deposits which are so recent that they have earned no interest.

I hope there is a math major out there with a better answer. But my college roommate was a summa cum laude math major and he seems to be perplexed by this same issue.