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Time-weighted and money-weighted return

Which return number is the fair one, and why are there two?

Which return number is the fair one, and why are there two?

Video coming soon

In this lesson

  1. Rendity calculates two returns. The time-weighted return (TTWROR) measures how well your investments did. The money-weighted return, the internal rate of return (IRR), measures how well your money grew.
  2. Deposits and withdrawals pull the two apart. The difference comes from when, and how much, you paid in or took out. A large deposit just before a weak year pulls the IRR down, while the TTWROR stays unaffected.
  3. Rendity shows the IRR for the whole history only. The IRR judges your money from the first euro. For a single year, Rendity would have to pretend you deposited the whole portfolio value again on 1 January and stretch a few months into a full year. So the IRR card stays empty for single periods.
  4. Each number answers its own question. Use TTWROR to compare with an index or a fund. Use IRR to answer “did I make money on what I put in?”.

The example: two years and one large deposit

You start with €10,000. In year one you make +20 % and have €12,000. Encouraged, you add €40,000 and start year two with €52,000. In year two you make −10 % and have €46,800 left.

Your investments did 1.2 × 0.9 = 1.08, so +8.0 % over two years. That is +3.9 % a year, which is what TTWROR shows.

Your money looks different. You paid in €50,000, and €46,800 is there. That is −5.4 % a year, which is what the IRR shows.

In the sample account, the Cash Ledger shows a similar situation. In March 2025, €25,000 comes into the account, €24,000 of it is changed into dollars, and the next day that money buys Amazon and more Google. A week later the market falls. Over the whole period, TTWROR and IRR in this account still end up almost the same.

Sample account, not real data, not investment advice.

Where to find it in Rendity

On the Performance page, the TTWROR and IRR cards sit at the top. If you choose a single year in the period at the top, the IRR card stays empty with the note “whole history only”. The Calculation card further down shows deposits as performance-neutral, and the Cash Ledger shows when they came in.

Included inSprout Tree Orchard

Terms from this lesson

Next lesson Risk and volatility

Education only, not investment advice. Tax topics are not tax advice.