Time-Weighted Return Calculator
Judge how well your investments performed independent of when you added or withdrew money, using the time-weighted return over two periods.
How it works
r₁ = V₁ ÷ V₀ − 1 · r₂ = V₂ ÷ (V₁ + flow) − 1 · TWR = (1 + r₁)(1 + r₂) − 1
Time-weighted return measures the performance of the investments themselves, stripping out the effect of when you happened to deposit or withdraw money. It works by chopping the timeline at each cash flow, computing the return of each sub-period on its own, and then compounding those returns together. Because a large deposit right before a good stretch would flatter a simple return, fund managers are judged on time-weighted return.
Worked example
You start with $10,000. It grows to $11,000 (a 10% first period), then you add $5,000, bringing the base to $16,000. It ends at $17,600, a 10% second period. TWR = (1.10)(1.10) − 1 = 21%, even though your dollar-weighted result differs because of the deposit.
Frequently asked questions
How is this different from money-weighted return?
Time-weighted return ignores the size and timing of your cash flows, so it isolates the skill of the investments. Money-weighted return (an IRR) is affected by when you added money, so it reflects your personal experience as an investor.
Why chop the period at each cash flow?
A deposit or withdrawal changes the amount at work, which would distort a single return figure. Measuring each sub-period on its own base and then linking them removes that distortion.
When should I use time-weighted return?
Use it to compare a fund or strategy against a benchmark, or to judge a manager who does not control the timing of deposits. For your own personal rate of return, money-weighted return is more relevant.
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Educational estimate, not investment advice. Past returns do not predict future results.