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Inspect the balance increase
An original account begins at 100, earns nothing and receives a 50 deposit at the end. It finishes at 150. Calling the 50% endpoint increase an investment return attributes the owner’s new money to the investments.
Use the no-performance check
Before the end deposit, wealth is still 100. After the deposit, it is 150. Investment gain is zero. Both the pre-flow valuation and the deposit amount support that classification.
| Cause | Amount |
|---|---|
| Starting wealth | 100 |
| Investment gain | 0 |
| Owner contribution | 50 |
| Ending wealth | 150 |
Do not repair every case by an arbitrary denominator
If the deposit instead occurs at the start, it creates a base of 150 for the period. A midperiod deposit is exposed for only part of the period. The method must match timing, rather than subtracting the same flow and always dividing by the original 100.
Retain transfer-side records
Classify the flow and its date, then use available valuations to define subperiod returns or build the investor’s dated schedule. An unresolved transfer should stay unresolved until the performance boundary can be reconciled.