Money-Weighted Return Calculator
Use this money-weighted return calculator to find the annual return your money earned, accounting for the size and timing of every contribution.
What it does
The Money-Weighted Return Calculator finds the single annual rate of return that ties together your initial investment, a contribution added later, and your ending value. Because it accounts for the size and timing of your cash flows, it measures the return your money actually earned.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
0 = −P0 − C1 ÷ (1 + r)^1 + EV ÷ (1 + r)^n, solved for r, where P0 is the initial investment, C1 the later contribution, EV the ending value and n the number of years
How it works
The tool solves for the internal rate of return: the rate that discounts every cash flow back to a net present value of zero. It uses a numerical search (bisection) to find the rate where the money you put in exactly balances the value you ended with.
Where it is used
- Measuring the actual return an investor earned, including the effect of contribution timing
- Comparing your personal result against a time-weighted (fund-level) return
- Judging whether adding money at a certain time helped or hurt your outcome
Worked example
An investor starts with $10,000.00, adds $2,000.00 at the end of the first year, and finishes year 2 with $14,000.00. The money-weighted return is …, on … invested for a total gain of ….
What the money-weighted return calculator does
The money-weighted return calculator finds the single annual rate of return that connects your initial investment, a contribution you add later, and the value you finish with. Because it accounts for the amount and the timing of every cash flow, it measures the return your money earned, not the return the market or fund produced on its own.
Two people can hold the same fund over the same period and end up with very different personal returns because they added money at different times. The money-weighted return captures your own experience, weighting each period by how much you had invested.
How the calculation works
The tool solves for the internal rate of return (IRR), the discount rate that makes the net present value of all your cash flows equal to zero: the rate at which the money you put in, adjusted for when you put it in, grows into the value you ended with.
There is no simple formula for this rate once more than one cash flow is involved, so the calculator uses bisection. It starts with a wide range of possible rates, tests the midpoint, and narrows the range until it converges on the rate that balances the equation.
The equation is: zero equals minus your initial investment, minus your later contribution discounted by one year, plus your ending value discounted over the full term.
Why timing changes your return
Money that is invested longer, or during a strong stretch, contributes more growth than money added just before a downturn, and the money-weighted return reflects that.
Take two investors in the same fund. One invests a large sum right before a strong year; the other adds the same amount right before a weak year. The fund returned the same percentage for both, but the first investor's money-weighted return is higher, because more of their capital was invested during the good period.
Well-timed contributions push your money-weighted return above the fund's reported return; poorly timed ones leave it below.
How to use the calculator
- Enter your initial investment, the amount you started with.
- Enter the contribution you added at the end of the first year.
- Enter your ending value, the total the account was worth at the end.
- Enter the number of years the investment ran.
The tool reports the money-weighted return, your total invested (starting amount plus the later contribution), and your total gain (ending value minus everything you put in).
Reading the results
The money-weighted return measures your personal outcome, not the investment on its own. A modest return on a large, well-timed base can be a very good result, while a high percentage on a tiny position may mean little in cash terms, so read it alongside your total invested and total gain.
Compare it with a time-weighted return for the same investment. A large gap shows the effect of your contribution timing: well above the time-weighted figure means your deposits landed at favourable moments, well below means the opposite. Timing is largely unpredictable, but the comparison shows how much of your outcome came from the investment and how much from your own decisions.
Common mistakes
- Confusing it with the fund's return. Do not expect it to match the return quoted in a fund fact sheet, which is time-weighted.
- Ignoring the scale of the money. A high percentage on a small base can add little to your wealth, so check the total gain in cash terms.
- Over-interpreting a single period. One year of good or bad timing says little about skill; compare across several periods or against a benchmark.
Over time, this measure can show whether your instincts to invest more or hold back have helped or hurt.
This article is general information only and is not financial advice.
About This Money-Weighted Return Calculator
Use this money-weighted return calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
What is a money-weighted return?
How is it different from a time-weighted return?
Why does the timing of contributions matter?
Can the money-weighted return be negative?
What inputs does the calculator need?
Is my data kept private?
About the author
