How to value your portfolio when you invest in dollars (or any other currency)

1. You hold two positions, not one

Buy a dollar-denominated fund and your result in euros depends on two things: how the fund did, and how the euro moved against the dollar. Some years those two pull in the same direction, and some years one cancels the other out.

This is not a problem to solve, it is a fact to know. What is a problem is attributing a good year to your asset choice when half of it was currency, because then you draw the wrong conclusion about your own skill.

2. Which rate to use, and when

For "what do I have today", use today's rate. For "how much did I put in", use the rate on the day of each contribution. Mixing the two — today's value against the rate you remember from when you bought — is the most common way to get a wrong number.

It follows that a manual spreadsheet needs a rate per date, not one cell you overwrite. That is exactly the maintenance that nobody keeps up for more than a few months.

• Current value: today's rate for every position.
• Contributions: the rate on the date of each one.
• Never a single "average rate" applied to everything at once.

3. Separating market from currency

A simple way to see the split: look at your position in its own currency, and then in euros. If the first is up 8% and the second up 3%, the currency took five points from you — nothing to do with the asset you picked.

Knowing which of the two moved is what stops you from changing a strategy that was working, or keeping one that was not. Same number, completely different lesson.

4. Why this gets automated or abandoned

Doing it properly by hand means keeping historical rates, applying them per position and per date, and redoing the valuation whenever you want a current total. Realistically, either a tool does it or you stop doing it.

FinBoard keeps updated exchange rates and values everything in your reference currency, so the consolidated figure is always there. This is educational content, not financial or tax advice.