holds true if either the time-weighted method is used, or there are no flows in or out over the period. If using one of the money-weighted methods, and there are flows, it is necessary to recalculate the return in the second currency using one of the methods for compensating for flows. Foreign currency returns over multiple periods It is not meaningful to compound together returns for consecutive periods measured in different currencies. Before compounding together returns over consecutive periods, recalculate or adjust the returns using a single currency of measurement. Example A portfolio increases in value in Singapore dollars by 10% over the 2015 calendar year (with no flows in or out of the portfolio over the year). In the first month of 2016, it increases in value by another 7%, in US dollars. (Again, there are no inflows or outflows over the January 2016 period.) What is the return on the portfolio, from the beginning of 2015, to the end of January 2016? The answer is that there is insufficient data to compute a return, in any currency, without knowing the return for both periods in the same currency. If the return in 2015 was 10% in Singapore dollars, and the Singapore dollar rose by 5% against the US dollar over 2015, then so long as there were no flows in 2015, the return over 2015 in US dollars is: 1.1 x 1.05 − 1 = 15.5% The return between the beginning of 2015 and the end of January 2016 in US dollars is: 1.155 x 1.07 − 1 = 23.585% Returns when capital is at risk Risk and volatility Investments carry varying amounts of risk that the investor will lose some or all of the invested capital. For example, investments in company stock shares put capital at risk. Unlike capital invested in a savings account, the share price, which is the market value of a stock share at a certain point in time, depends on what someone is willing to pay for it, and the price of a stock share tends to change continually when the market for that share is open. If the price is relatively stable, the stock is said to have "low volatility". If the price often changes a great deal, the stock has "high volatility". US income tax on investment returns To the right is an example of a stock investment of one share