Money-Weighted Rate of Return Calculator
Calculate your investment performance taking into account the timing and size of cash flows.
Cash flows represent money added to or withdrawn from your portfolio. For each cash flow, enter the amount (positive for deposits, negative for withdrawals) and the date it occurred.
Money-Weighted Rate of Return
What does this mean?
The Money-Weighted Rate of Return (MWRR) is the internal rate of return that makes the present value of all cash flows equal to the final value of the investment. It takes into account the timing and size of all cash flows, making it a more accurate measure of your personal investment performance.
A higher MWRR indicates better investment performance, while a lower MWRR suggests poorer performance. This metric is particularly useful for evaluating how your investment decisions have affected your portfolio's performance.
Why Retail Investors Should Use Money-Weighted Rate of Return
Accounts for Your Actual Investment Timing
Unlike simple return calculations, MWRR considers when you actually invested or withdrew money. This is crucial for retail investors who typically make periodic investments or withdrawals rather than investing a lump sum. It accurately reflects the impact of your investment timing decisions on your overall returns.
Measures Your Personal Performance
MWRR calculates the return that you personally achieved, not just what the investment itself returned. This distinction is important because your actual returns depend on when you bought and sold, not just how the investment performed over a standard period. It answers the question: 'How well did my investment decisions perform?'
Better Decision Making
By using MWRR, you get a more accurate picture of your investment performance, which leads to better decision making. It helps you understand whether your timing of cash flows has helped or hurt your returns, allowing you to adjust your investment strategy accordingly. This is especially valuable for long-term investors focused on building wealth.