Time-weighted vs money-weighted return: what’s the difference?
Last updated · By StockDashes
StockDashes shows both: your time-weighted return against the S&P 500 total return, in euros or US dollars, and your money-weighted return per year next to it. The time-weighted return (TWR) measures how your holdings did, with the timing of your deposits and withdrawals taken out — which is why it is the one to compare with an index. The money-weighted return (MWR, the internal rate of return or IRR) measures what your own money earned, timing included: money added before a rise lifts it, money added before a fall pulls it down. With no money in or out, the two are the same.
How each one is calculated
Time-weighted return
Split the period at every deposit and withdrawal, take the return of each piece, and chain the pieces: (1 + r₁) × (1 + r₂) × … − 1. Each piece only sees how the holdings moved, so the size and timing of your deposits drop out.
Money-weighted return
Find the one yearly rate at which your deposits, your withdrawals and today’s value balance out — the internal rate of return of your own cash flows (XIRR when the dates are irregular). Money that was invested longer, or in larger amounts, weighs more.
How StockDashes shows them
Time-weighted: the chart against the S&P 500
On the performance page, Your portfolio vs the S&P 500 is your time-weighted return, linked day by day from your holdings: each day’s purchases and sales are taken out, so deposits don’t move it, with cash left out. The S&P 500 is its total return in the same currency, and the vs S&P 500 card gives the gap in percentage points.
Money-weighted: Your return per year
The Your return per year card is the money-weighted return over the same period, as a yearly percentage, from your starting value, every later deposit and today’s value including cash. It appears when the cash history in your import adds up to today’s balance.
Your own deposits in the S&P 500
The If invested in the S&P 500 card puts your starting value and each later deposit into the S&P 500 on the same days — your own timing, applied to the index — and shows what that would be worth today.
A worked example
Two fictional investors hold exactly the same shares for a year. The holdings rise +12.0% from 1 January to 1 July and fall −6.0% from 1 July to the next 1 January. Investor A puts 20,000 euros in on 1 January. Investor B puts 10,000 euros in on 1 January and another 10,000 on 1 July — just before the fall.
| Investor A | Investor B | |
|---|---|---|
| Put in | 20,000 euros | 20,000 euros |
| Value after a year | 21,056 euros | 19,928 euros |
| Profit or loss | +1,056 euros | −72 euros |
| Time-weighted return | +5.3% | +5.3% |
| Money-weighted return (per year) | +5.3% | −0.5% |
Both have a time-weighted return of +5.3%: the holdings did exactly the same for both. Investor A never added money, so A’s money-weighted return is the same +5.3%. Investor B added half of the money just before the fall, so most of B’s money only saw the −6.0%: B’s money-weighted return is −0.5% a year. Neither figure is wrong — they answer different questions.
Which one to look at
- Comparing with an index, a fund or another investor: the time-weighted return, because an index has no deposits of its own.
- Seeing what your own money earned, timing included: the money-weighted return.
- A big gap between the two: a sign that the timing of your deposits or withdrawals mattered over the period.
What you need
- An account: you sign in, and your portfolio stays private to it.
- Your trade history: the export from your broker. DEGIRO and Saxo statements also carry your cash history, which the money-weighted return is built from.
- Your currency: euros or US dollars, chosen when you set up your account and changed in Settings.
Create your accountThen import your broker’s export: both returns are on the performance page.
TWR vs MWR, with the formulas and another example →
Why DEGIRO’s profit doesn’t match your real return →
How much of your return comes from the euro–dollar rate →
Frequently asked questions
What’s the difference between time-weighted and money-weighted return?
The time-weighted return measures how your holdings did, with the timing of your deposits and withdrawals taken out. The money-weighted return measures what your own money earned, timing included. They are the same when no money moves in or out, and differ when it does.
Why is my money-weighted return lower than my time-weighted return?
Usually because more money went in just before a weaker stretch, or less just before a strong one. The money-weighted return weighs each euro by when and how long it was invested; the time-weighted return doesn’t.
Is the money-weighted return the same as IRR?
Yes. It is the internal rate of return of your own cash flows, usually given per year; XIRR is the same calculation for cash flows on irregular dates.
Which return should I compare with an index?
The time-weighted return, because an index has no deposits or withdrawals of its own. StockDashes sets it next to the S&P 500 total return in the same currency.
Does StockDashes show TWR or MWR?
Both. The performance page shows the time-weighted return against the S&P 500 total return and, next to it, the money-weighted return as a yearly percentage.
Which holdings do the returns cover?
Holdings listed in the US and European shares that also trade in the US, such as ASML or Shell.
The example portfolio is fictional. Nothing on this page is investment advice.