Portfolio Return Lab
Measurement period
Return comparison
External cash flows
Enter each contribution or withdrawal with the total portfolio value immediately before that flow. Contributions are positive; withdrawals are negative.
| Date | Portfolio value immediately before flow | External cash flow | Actions |
|---|---|---|---|
Deposits, withdrawals, and transfers across the portfolio boundary are external flows. Dividends, interest, trades, and fees that stay inside the measured portfolio are not external flows; their effect belongs in the portfolio value and return.
Time-weighted subperiod audit
Each subperiod ends at a valuation taken before the external flow. The flow is then applied before the next subperiod begins, so contributions and withdrawals do not mechanically create investment return.
| Subperiod | Opening value after prior flow | Ending value before next flow | Flow after subperiod | Subperiod return |
|---|---|---|---|---|
| 2025-01-01 → 2025-07-01 | 10,000 | 11,000 | 1,000 | +10.00% |
| 2025-07-01 → 2026-01-01 | 12,000 | 13,000 | — | +8.33% |
Why the two return numbers answer different questions
Money-weighted return uses the size and timing of the dollars you added or removed. A contribution made before a strong period therefore has more influence than the same contribution made later. This lab calculates that rate as a dated internal rate of return using a 365-day year.
Time-weighted return removes the mechanical effect of external cash flows. It calculates each return between cash-flow checkpoints and geometrically links those subperiods. That makes it useful for separating portfolio performance from the timing of contributions and withdrawals.
Valuation timing matters
For every intermediate external flow, enter the portfolio value immediately before the contribution or withdrawal. The tool applies that flow after the valuation. If you only know beginning value, ending value, and cash-flow amounts—but not portfolio values at the cash-flow dates—a true cash-flow-neutral TWR cannot be reconstructed from those inputs alone.
TWR is not annualized when the measurement period is shorter than one year. XIRR is an annualized mathematical rate by definition, so short measurement periods can produce very large annualized money-weighted figures.
When money-weighted return is withheld
An IRR calculation can have more than one mathematically valid answer when the investor-perspective cash-flow sequence switches sign repeatedly. This lab fails closed when that ambiguity is possible instead of selecting a result based on an arbitrary starting guess. It also withholds XIRR when the investor cash-flow sequence never contains both a positive and a negative value.
The lab uses only the values you enter. It does not reconstruct brokerage transactions, taxes, fees, dividends, or historical holdings, and neither return measure is a forecast of future performance.
Method references
- Microsoft XIRR documentation for irregular dated cash flows, 365-day discounting, and the positive/negative cash-flow requirement.
- GIPS Standards Handbook for cash-flow-neutral time-weighted returns, valuation at cash flows, and geometric linking of subperiods.