Know your zero. Brought to you by math.

[usps2013]

I am confident this has been posted at some point, but it always bears reminding.

I see lots of folks talk about a drop in the market or taking a loss on a failed IFT. Most just want to get the loss back, i.e., get back to zero. In percentages, zero moves around a little bit. For example, the nominal loss from a 10% decline is not recovered by a subsequent 10% gain (100 - 10% = 90; and 90 + 10% = 99).

If you want to know "your" zero, here is the math:

X = (A / (1 - (A / 100)))
I
X = your zero %
A = the % decline

E.g., if I lose 5% in one move, I must recover 5.2% to get back all my losses.

X = (5 / ( 1 - (5 / 100)))
.05
1 - .05 = .95
5 / .95 = 5.26315

X = 5.2...

Good luck and remain cognizant of your real goal.

[crondanet5]

Nice. A while back I asked for a formula to determine the rate of gain in the TSP Funds. Do you have a formula for determining that?

[mjedlin66]

Nice. A while back I asked for a formula to determine the rate of gain in the TSP Funds. Do you have a formula for determining that?

(Price_2 - Price_1)/(Date_2 - Date_1) For change in price/time

If you want a % over time, then:
(Price_2 - Price_1)*100/(Price_1)(Date_2 - Date_1)

[sgtnichols]

Nicely explained. Thanks for that.