Calculating Your Time-Weighted Rate of Return (TWRR)

In this two-part video series, I’m going to show you two popular ways to calculate your portfolio’s rate of return. In today’s part 1 video, I’ll cover the time-weighted rate of return (TWRR). In part 2, we’ll take a look at your money-weighted rate of return (MWRR).

Please feel free to download the model portfolios from my blog before getting started:


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[edwardtolkachenko]

There is no other explanation like this on YouTube. Thank you!

[ksn]

I saw around 3 videos before landing here none of them was this much clear thanks a lot

[hercules]

That is an absolutely genius explanation. I had a hard time understanding this concept until I watched this video. Thank you for your time!!

[ee-sjqr]

preparing for my m6 exam and this is really useful for me to understand Time weighted rate of return

[spamfrank]

Absolutely the best to the topic i have ever seen. Easy to understand. Perfect!!!

[BrunoAlves-uysl]

Great topic, Justin. Thank you also for the editor to create the explanation graphics. They help a lot!

[muhammadsyahmi]

Fantastic, easy to understand explanation. You're a champ, thanks!

[coldavenue]

Justin and Shannon, the way you explain and present is stunning. It gives anyone with an internet access the chance to learn complicated things easily. The Millenials and younger people are given a treasure here on youtube. Knowledge will make the life of many people easier, reducing suffering in some way. Imagine at which level mankind could be, if even the kid in the back of beyond could fight his/hers way to prosperity just by utilizing knowledge from yt videos. This is so cool!

[mike_strong]

Thank you, Justin! I have a client needing to do a return of excess for several years and the investment company is not doing the math correctly!

[sunsetspey]

Your TWRR whitepaper from several years ago is what prompted me to use the calculation so thanks. Regarding the last point on the logistics required to make use of the TWRR, while it is a bit of work to gather data, it is not too onerous unless there are a large number of cash flow events and/or positions in the portfolio. I'd argue that tracking spending over the course of a month for personal finance budgeting purposes is more difficult than the use case for the single asset allocation ETF holder that makes regular monthly contributions throughout the year. All they need to do is look up closing prices for a single security 12 times and use that as in input for the calculation you laid out in the video which is achievable with basic spreadsheet formula skills. For those that have many positions to track along with many cash flow events, the best solution I've found is the programmatic approach. For that solution, one will need basic programming skills and be familiar with REST in order to get historical closing price data from a data provider like Alphavantage or IEX that provide APIs. Questrade also has an API that is free for Questrade users but it uses OAuth which requires mode advanced knowledge and dev skills.

[portfedh]

This is the clearest explanation Ive seen on the topic. Thank you!

[NaveenNagalingam]

Love the Arrested Development references! ;)

[salmamarine]

You just saved my study night thank you 🙏🏻🙏🏻

[OG-bbbk]

Brother, you are amazing at explaining. Keep up the good work!

[paulo]

Excellent video Justin. We are looking forward for part 2 and 3. Graphics help a lot to understand this topic

[shadrinan]

Thank you for explanations! It helped me a lot!

[mrs.t]

excellent explanation. can't wait for part 2!

[adbp]

I'm sure someone has created an 'app' for that. If not, looks like your the man for the job!

[Helix]

Very nice video Justin. Looking forward to part 2.