Product update: How returns are calculated on Sharesies

We’ve made some small changes to streamline Portfolio tracking in Sharesies. As we’ve grown, we’ve added more things to Sharesies—such as the ability to pay your Sharesies subscription from your Wallet, managed funds, and tax calculations. These changes have impacted the Portfolio tracking and have meant that depending on whether you paid your subscription by Wallet or card, you may have seen different things. In that time, we’ve also learnt a lot about what’s important to our investors.

Today we’ve made some changes to bring consistency and clarity to the numbers we show on Sharesies—explained below. We’ve also made some improvements to the interaction of these panels—they’re now swipeable on a mobile device, and should be smoother and quicker as you switch between them.

We’ll be doing a more in-depth review of the numbers we show on Sharesies in future—we’d love to know if there’s any info you’d find helpful or interesting to track so we can keep that in mind.

What numbers are we showing and what do they mean?

Portfolio value: This is the total value of all the investments you own and any money in your Wallet, net of any tax you might currently owe. The value of the investments you own is calculated using the ‘sell price’ of the investments. For managed funds this is the price once the transaction fees have been removed. For exchange-traded funds this is a recent market price.

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Returns: Returns are calculated by adding the ‘Value difference’ and any dividends you've received, minus tax, management fees and transaction fees—it does not include payments of your Sharesies subscription. Returns now show more prominently on the ‘Total returns summary’ screen—as a dollar amount, and a percentage. We’ve also removed deposits from this screen, as this was causing confusion for investors who had withdrawn money. We may look to add deposits to a different area of Sharesies if investors mention this is something valuable for them to know. Deposit information is also available in the Wallet transaction screen.

Portfolio-total-summary.png

The ‘Total growth’ chart now shows your Portfolio value, and returns over time, so you can track this historically. Previously, this chart used to track deposits and returns—we’ve updated this to be clearer and align to the other numbers being tracked.

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Why can’t Sharesies’ returns be compared with a bank?

We often get asked how these returns compare to bank savings and deposits. There are a few reasons why it’s not directly comparable:

  • Simple return vs annualised return—all the return numbers on Sharesies are a simple return (they do not adjust for time), whereas banks often refer to an annualised return. As an example, if you earn 4% p.a on a 6-month bank deposit, your simple return would be 2% (because it's only for 6 months—half a year, so half of 4%). It’s the little ‘p.a.’ that makes the difference. This stands for ‘per annum’ and is a way to annualise a return. If Sharesies says you have returned 4%, that’s how much you’ve returned whether you’ve been investing with Sharesies for 1 week or 2 years.

  • Tax—the return numbers on Sharesies are calculated after tax has been accounted for. This is called ‘net of tax’. Return numbers at the bank haven’t removed the tax yet. This is called ‘gross of tax’. As an example, if you place a $10,000 deposit for 1 year at 4% p.a. with a bank, you’ll receive $400 in interest. If you remove the tax from that number (and you have a 28% PIE tax rate), then you’ll pay $112 in tax—so your after-tax return would now be 2.88% p.a.

What’s up next:

  • We’re currently working on optimisations to our buy process: including an editable cart and clearer order tracking.

  • Auto-invest: We’re working on adding the ability to set up an automated investment order. This will also include the ability to customise your order or choose from some pre-made orders.

  • More investments: We’ve got some more funds planned to launch over the next few months, and we’re also starting to explore the ability to add individual companies to Sharesies.

We’re always looking for how we can improve Sharesies, so please let us know if there is anything that would make investing more enjoyable for you! Email us at [email protected].

Happy investing!