Time-Weighted Rate of Return Calculator
Calculate your investment performance independent of the timing of external cash flows.
Valuation points represent moments when you valued your portfolio and/or made cash flows. For each point, enter the portfolio value before any cash flow, the date, and the cash flow amount (positive for deposits, negative for withdrawals).
Time-Weighted Rate of Return
What does this mean?
The Time-Weighted Rate of Return (TWRR) measures the compound rate of growth of a portfolio, eliminating the distorting effects of cash inflows and outflows. It represents the performance of the investments themselves, independent of when you added or withdrew money.
TWRR is particularly useful for evaluating the performance of investment managers or strategies, as it isolates the effects of their investment decisions from the timing of external cash flows. It allows for fair comparisons between different portfolios or against market benchmarks.
Why Retail Investors Should Use Time-Weighted Rate of Return
Evaluates Investment Strategy Performance
TWRR isolates the performance of your investment strategy from the effects of your deposit and withdrawal decisions. This makes it ideal for evaluating how well your chosen investments or investment manager performed, regardless of when you added or removed money from your portfolio.
Enables Fair Benchmark Comparisons
When comparing your portfolio's performance to market indices or other benchmarks, TWRR provides the most accurate comparison. Since market indices don't account for your specific cash flow timing, using TWRR allows for an apples-to-apples comparison of performance.
Complements Money-Weighted Returns
Using both TWRR and MWRR gives you a complete picture of your investment performance. TWRR tells you how well your investments performed, while MWRR tells you how well your investment timing decisions affected your personal returns. Together, they provide powerful insights for optimizing your investment strategy.