Your Broker Says +18%. Your Actual Return Is 11%. Here's Why.
3 min read
Open almost any broker app in Indonesia and you will see a single percentage next to your portfolio. It is nearly always simple return: how much your holdings are worth now, against how much you put in.
That number is easy to compute and easy to misread. It quietly assumes every rupiah you invested has been working for the same amount of time. For anyone who buys gradually, which is to say most people, that assumption is wrong.
The two numbers
Simple return asks: what did I put in, and what is it worth now?
(Current value − Total invested) ÷ Total invested
XIRR asks a harder question: what constant annual rate would have turned my specific deposits, on the specific dates I made them, into today's balance? It is the same internal-rate-of-return calculation that corporate finance uses to compare projects, applied to your own cash flows.
The difference only matters when money arrives at different times. Which is exactly what happens with a monthly buy.
A worked example
Say you buy 10 million rupiah of an index fund every month for a year. The fund has a rough start, then rallies hard in the final quarter.
| Amount | Held for | |
|---|---|---|
| January deposit | Rp 10,000,000 | 12 months |
| June deposit | Rp 10,000,000 | 7 months |
| December deposit | Rp 10,000,000 | 1 month |
| Total invested | Rp 120,000,000 | |
| Year-end value | Rp 141,600,000 |
Simple return says +18%. It is not lying, exactly. You did put in 120 million and you do have 141.6 million.
But your December deposit earned that return for one month, not twelve. Your average rupiah was invested for roughly six and a half months, not a year. XIRR accounts for that and lands near 11% annualised.
Which one is flattering you
The direction of the gap tells you something useful.
XIRR below simple return means your later money did the heavy lifting. You added funds shortly before a rally. Pleasant, but it also means your headline number is partly an accident of timing rather than evidence the strategy works.
XIRR above simple return means your early money compounded quietly for a long time. This is the boring, good outcome, and simple return actively understates it.
A very large gap in either direction usually means your contributions were lumpy, and that no single percentage describes your year honestly.
Why this matters more in Indonesia
Two local factors widen the gap.
Monthly investing through fintech apps is now the default entry point for retail investors here, so irregular cash flows are the norm rather than the exception. And IDX has stretches where most of the year's move lands in a handful of weeks. When returns are concentrated in time, when you bought dominates what you bought.
That combination is precisely the condition under which simple return is least informative.
Checking your own number
You need three things: every deposit and withdrawal with its date, your current balance, and a solver. In spreadsheets the function is literally XIRR. Give it the amounts in one column, dates in another, contributions negative and current value positive.
NetWort computes this for you automatically from your transaction history, which is why the number on your dashboard sometimes disagrees with your broker's. It is not a discrepancy. It is a different, more demanding question.