Time-weighted vs money-weighted return (TWR vs XIRR)
Why your portfolio can show a gain and a loss for the same year — and which return to look at depending on the question you're asking.
Last reviewed 2026-09-17
Portfolio Tracker shows three return figures for the same period. When they disagree, it isn't a bug. Each one answers a different question, and the gap between them tells you something useful about timing.
The short version
| Measure | Question it answers |
|---|---|
| Time-weighted return (TWR) | How well did my investments perform, ignoring when I added or withdrew money? |
| Money-weighted return (XIRR) | How did my money actually do, given when I put it in? |
| Simple return | How much did the balance grow, beyond what I deposited? |
A year where they disagree
- On 1 January you invest $10,000.
- By 1 July it has risen 10%, to $11,000.
- Encouraged, you deposit another $10,000. The balance is now $21,000.
- The market then falls 5% for the rest of the year. You finish at $19,950.
| Measure | Result | Why |
|---|---|---|
| Time-weighted | +4.5% | +10%, then −5%: 1.10 × 0.95 = 1.045 |
| Money-weighted (XIRR) | about −0.3% | Twice as much money was invested during the fall as during the rise |
| Simple | −0.5% | $19,950 − $20,000 deposited = −$50, divided by the $10,000 you started with |
The investments themselves had a good year: +4.5%. But the extra $10,000 arrived just before the fall, so your actual dollars roughly broke even. Both statements are true.
Time-weighted return
TWR splits the period at every deposit and withdrawal, measures the return of each piece, and multiplies them together. Cash moving in and out has no effect on the result.
That makes TWR the right number for judging your investment choices and for comparing against a benchmark like the S&P 500. The index doesn't get deposits, so a fair comparison has to take yours out too. Fund managers report TWR for exactly this reason.
In Portfolio Tracker, deposits and withdrawals you record as funding are treated as cash moving in and out, not as gains or losses. Dividends and interest count as part of your return.
Money-weighted return (XIRR)
XIRR finds the single annual rate that would turn your actual deposits and withdrawals, on their actual dates, into your ending balance. It's the same calculation as a spreadsheet's XIRR function.
Because it weights each period by how much money you had invested, XIRR shows your personal result, including the effect of your timing. It's the better number for "did my savings plan work?"
Watch out for short periods. XIRR is an annual rate. Over a few weeks, a small move is scaled up to a yearly figure and can look dramatic — a 2% gain in one month shows as roughly 27% a year. Use longer periods for XIRR, or look at TWR for short windows.
Simple return
Simple return is the change in value, minus what you deposited, divided by the starting value. It's easy to understand but sensitive to when money came in: a large deposit late in the period barely has time to earn anything, which pulls the figure down.
Which one should I look at?
- Am I beating the market? Time-weighted, compared with the benchmark line on the chart.
- How are my savings actually doing? Money-weighted (XIRR), over a year or more.
- A big gap between the two? Your deposits and withdrawals were well timed, or badly timed. XIRR above TWR means you added money before rises; below means you added it before falls.