HesapHanem

Money-Weighted Return Calculator

Enter your beginning value, mid-period contribution, ending value, and the number of years to solve for your money-weighted annual return.

How it is calculated

The tool finds the single yearly rate r that grows your starting balance and one mid-period contribution into the ending balance:

B × (1 + r)Y + C × (1 + r)Y/2 = E

B is the beginning value, C the contribution, E the ending value (all in dollars) and Y the period in years. The contribution is always assumed to land exactly halfway through, so it compounds for half the period. There is no closed form, so the tool searches between −99% and +100% by bisection. Ending value and years must be above zero, beginning value cannot be negative, and beginning and contribution cannot both be zero. A negative contribution is a withdrawal, but it cannot exceed the beginning value. If no rate between −99% and +100% fits, nothing is shown. Total gain is E − (B + C).

Worked example

You start with $50,000, add $10,000 midway, and after 4 years hold $72,000. Total contributed is 50,000 + 10,000 = $60,000.00 and the gain is 72,000 − 60,000 = $12,000.00. The solver looks for the rate where 50,000 × (1 + r)4 + 10,000 × (1 + r)2 reaches 72,000. At r = 5.08% the first part is about 60,960 and the second about 11,042, which add to roughly 72,000, so the money-weighted annual return is 5.08%.

Try this example →

Common mistakes

  • Entering the contribution as a yearly amount. The field is a single payment made at the midpoint; regular yearly deposits need another tool.
  • Assuming the contribution happened when you actually made it. The tool always places it at exactly half of the period, so a deposit made in the last month is treated as earlier than it was.
  • Entering an ending value of zero for a total loss. The ending value must be above zero, and a value so small that the yearly rate would be below −99% also shows nothing; a loss of 90% of the money still gives a result.
  • Comparing the answer with a fund's published time-weighted return and treating the difference as an error. They answer different questions, and your own timing of deposits changes this figure.
  • Entering a withdrawal larger than the beginning balance as a negative contribution. It is rejected and shows no result, as is a gain that would need more than +100% a year.

About this calculator

The money-weighted rate of return (MWRR) — also called the dollar-weighted return — is an IRR-style measure of investment performance that accounts for the size and timing of cash flows into and out of a portfolio (in this simplified version, a single contribution assumed to land at the midpoint of the period), unlike the time-weighted return used for comparing fund managers, which strips out the effect of contributions and withdrawals entirely. MWRR is solved by finding the single discount rate at which the present value of all cash flows (beginning balance, any mid-period contributions or withdrawals, and ending balance) nets to zero, typically via an iterative bisection or Newton's-method solve rather than a closed-form formula.

Individual investors, financial advisors, and retirement planners favor MWRR because it reflects what actually happened to an investor's own money — if you added a large contribution right before a market rally, MWRR gives you credit for that good timing, whereas a time-weighted return would not. This makes it the more personally relevant number for someone asking ‘how well did my actual account perform,’ as opposed to ‘how well did the underlying strategy perform regardless of my cash-flow timing.’

This calculator takes your beginning balance, a contribution assumed to be made at the midpoint of the period, your ending balance, and the number of years, then uses an IRR-style bisection solve to return your money-weighted annual return.

Was this helpful?

You can pick up to 3 reactions.

Comments

  • Be the first to comment.

Popular calculators

Loan Calculator

Monthly payment, total interest and full amortization schedule.

Percentage Calculator

Percent change, percent of, and ratio calculations.

Discount Calculator

Calculate final price, savings, and discount amount.

BMI Calculator

Body mass index from height and weight (metric or imperial).

Age Calculator

Compute your exact age in years, months and days from a birth date.

Compound Interest Calculator

Calculate the final amount and interest earned with compounding.

All Calculators