Time Weighted Return Calculator
When deposits and withdrawals flow in and out of a portfolio, a simple return calculation lies. Add $4,000 to a $10,000 account that grew to $11,000, watch it reach $16,500, and the naive math says you made 65%. You did not: the market gave you 10% and then 10% again, for a true 21%. The deposit was your doing, not the market’s.
The Time-Weighted Return Calculator below splits your timeline at every cash flow, computes each sub-period’s return, and chains them into one clean performance number, with an optional annualized figure. This is the same method behind professional fund reporting under the GIPS standards.
Sub-period 1
Sub-period 2
Sub-period 3 (optional)
Quick Answer
Why simple returns lie when money moves
A simple return divides profit by what you put in. But “what you put in” is ambiguous once cash flows mid-stream: money deposited later had less time to grow, and money withdrawn early stopped growing at all. Time-weighted return solves this by cutting the timeline at each cash flow and measuring only what the investments did between cuts. The deposits are your decisions; the sub-period returns are the market’s.
How the chaining works
Split at every cash flow. Each deposit or withdrawal ends one sub-period and starts the next. The next sub-period’s start equals the previous end value plus the cash flow ($11,000 + $4,000 = $15,000).
Return per sub-period. Divide each sub-period’s gain by its own start value: 10.00%, then 10.00%. Cash flows never enter these fractions.
Chain by multiplication. 1.10 x 1.10 – 1 = 21.00%. Chaining (not adding) is what makes multi-period returns compound correctly.
Worked example, checked against this exact tool
| Sub-period | Start | End (before flow) | Cash flow | Return |
|---|---|---|---|---|
| 1 | $10,000 | $11,000 | +$4,000 | 10.00% |
| 2 | $15,000 | $16,500 | $0 | 10.00% |
| Time-weighted return | 21.00% | |||
Enter the pre-filled values and the calculator reproduces 21.00% exactly, with the annualized 10.00% per year over the 2-year horizon. Try changing the deposit to $40,000: the TWR does not move at all, which is precisely the point. A dollar-weighted return would swing wildly with that change, because it measures your timing, not the investments.
TWR vs money-weighted return: which answers which question
Time-weighted return
- Strips out deposits and withdrawals
- Measures the investments’ performance
- Right for comparing fund managers and strategies
- Required by GIPS for compliant performance reporting
- Ignores whether your timing was good or bad
Money-weighted return (IRR)
- Includes the size and timing of your cash flows
- Measures your personal experience
- Right for “how did I do on this account?”
- Punishes deposits made just before a drop
- Two investors in the same fund can have different MWRs
Neither is “better”; they answer different questions. Use TWR to judge the manager, MWR to judge your outcome. When a fund advertises its track record, regulators and the CFA Institute’s GIPS standards require the time-weighted figure, because a manager should not get credit (or blame) for when clients chose to deposit.
What competing calculators miss
Two inputs and a prayer. The most common TWR tools online ask for a start value, an end value, and total cash flows, then apply a single-period formula and call it time-weighted. That is not TWR; without sub-period splits there is nothing to chain. Ours requires the actual sub-period structure the definition demands.
No per-period breakdown. Tools that do chain rarely show the sub-period returns, so you cannot spot which period drove the result. Our results line lists every sub-period return in the chain.
No annualization. A 21% return over two years and a 21% return over six months are very different achievements. The annualized figure is included because performance without a time denominator is marketing, not measurement.
Confusing TWR with CAGR. Several “TWR calculators” actually compute a compound annual growth rate from start to end values, which silently assumes no interim cash flows. If your account had any deposits or withdrawals, that number is wrong; the sub-period method here is right.
Key takeaways
- TWR = chained sub-period returns with cash flows stripped out: 21.00% in the worked example.
- Use TWR to judge investments and managers; use money-weighted return to judge your own outcome.
- Changing the deposit size never changes TWR. If it does in some other tool, that tool is not computing TWR.
- Always annualize before comparing returns across different time horizons.
Frequently asked questions
Time-weighted return removes the effect of your deposits and withdrawals, measuring only investment performance. Money-weighted return (IRR) includes the timing and size of your cash flows, measuring your personal outcome. A big deposit just before a rally boosts your MWR but leaves TWR unchanged.
Because managers do not control when clients deposit or withdraw. The GIPS standards require time-weighted returns so that a manager is judged on investment decisions, not on clients’ timing luck.
Yes, if reinvested they are part of the end-of-period value; if paid out as cash and withdrawn, they are a negative cash flow (withdrawal). Either way the sub-period math handles them as long as your valuations are accurate.
Yes. If sub-periods lose value, the chained product falls below 1 and TWR goes negative. A -10% followed by -10% chains to -19%, not -20%, because the second loss applies to a smaller base.
Quite accurate: each sub-period return divides by its start value, so a stale valuation at a cash-flow date distorts that sub-period. Brokerage statements usually provide month-end values, which is why monthly sub-periods are the industry norm.
Only when there are no interim cash flows. CAGR compounds start-to-end values over time; TWR chains sub-periods split at cash flows. With deposits or withdrawals in the middle, CAGR computed naively is wrong and TWR is right. See our geometric rate of return calculator for the pure CAGR case.
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References
- CFA Institute, “Global Investment Performance Standards (GIPS)” – the industry standard requiring time-weighted returns. CFA Institute GIPS Standards. Accessed October 19, 2026.
- CFA Institute, “Time-Weighted and Money-Weighted Rates of Return” – methodology refresher reading. CFA Institute Refresher Readings. Accessed October 19, 2026.
- American Association of Individual Investors, “How to Calculate the Return on Your Portfolio” – TWR vs money-weighted with worked examples. AAII Journal. Accessed October 19, 2026.
- Morningstar, “Understanding Investment Performance” – investor education on return measurement. Morningstar Portfolio Education. Accessed October 19, 2026.
- Corporate Finance Institute, “Time-Weighted Rate of Return” – formula derivation and examples. CFI: Time-Weighted Rate of Return. Accessed October 19, 2026.