Money Weighted Return Calculator

Your fund reports one return; your account often earns another. The money-weighted return is the internal rate of return (IRR) of your actual cash flows: when you added money and when you took it out change the answer. This calculator takes your initial investment, every dated contribution and withdrawal, and your final value, then solves for the annualized rate that ties them together.

How the calculation works

The money-weighted return is the internal rate of return (IRR): the single annualized rate r that makes the present value of all your cash flows sum to zero. Each contribution enters as a negative flow at its year, each withdrawal and the final value as a positive flow at its year, and the equation 0 = sum of CF_t / (1 + r)^t is solved iteratively. There is no closed-form answer, so the calculator brackets the root and bisects until it converges. Timing matters because a contribution made just before a rally counts more than one made years earlier.

Worked example: 13.3% true return

You invest $10,000 at the start, add $5,000 at the end of year 1, and the account is worth $18,500 at the end of year 2. The cash flows are -$10,000 at year 0, -$5,000 at year 1 and +$18,500 at year 2. Solving gives r = 13.29% per year. The simple return is only ($18,500 – $15,000) / $15,000 = 23.33% total, which says nothing about timing; the money-weighted return of 13.29% annualized is your true personal performance. Enter these numbers in the calculator above to verify.

Money-weighted vs time-weighted

Time-weighted return (the geometric mean of period returns) measures the manager or the fund: it strips out your deposits and withdrawals. Money-weighted return measures you: it rewards adding money before good periods and penalizes adding before bad ones. Use time-weighted to judge a fund, money-weighted to judge your own decisions. If your money-weighted return trails the fund’s time-weighted return, your timing hurt you.

What competing tools miss

Some competing calculators get the formula wrong outright: one computes a simple net-cash-flow ratio that ignores timing completely, and another computes the geometric mean of period returns, which is the time-weighted return by another name. Of the tools that do solve the IRR, none let you date each cash flow explicitly or show a comparison against the simple return. This page solves the true IRR with explicit year timing per flow, lists every flow in a table, and puts the timing-blind simple return next to it so the difference is visible.

Frequently asked questions

Is money-weighted return the same as IRR?

Yes. Money-weighted return is the internal rate of return of the investment’s cash flows, annualized. It is also called the dollar-weighted return.

Why does my return differ from my fund’s reported return?

The fund reports a time-weighted return that excludes your deposits and withdrawals. Your money-weighted return includes them, so your timing changes the number.

How do I enter withdrawals?

Select “Withdrawal” as the flow type and enter the amount and year. The calculator assigns the correct sign automatically.

Can the money-weighted return be negative?

Yes. If withdrawals plus final value are worth less than what you put in, the IRR is negative, reflecting a real loss.

What if I contribute monthly instead of yearly?

Enter fractional years: a contribution 6 months in is year 0.5, 3 months is year 0.25. The IRR math handles any timing.

Does this account for fees and taxes?

Only if you include them. Enter fees as contributions (money leaving your pocket) so the return reflects what you truly kept.