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Money-Weighted Rate of Return (MWRR) Calculator

WOWA® Simply Know Your Options

Use this money-weighted rate of return calculator to estimate the annualized return you earned based on the amount and timing of your investments and withdrawals.

Enter your initial investment and the money you received. You can add more investments or withdrawals if needed.

Inputs

Insert the date and amount of each cash flow associated with your investment

Cash Flow

Date

Amount

Initial Investment

Invest

$

Withdrawal

InvestWithdraw

$

Add Investment or Withdrawal

Calculate MWRR

The money-weighted rate of return, or MWRR, measures the return you earned while accounting for the amount and timing of money added to or removed from an investment.

It considers:

• Your initial investment
• Additional contributions
• Withdrawals and income received
• The investment’s ending value
• The date of every cash flow

MWRR is called “money-weighted” because periods when you had more money invested have a greater effect on the result.

For example, suppose your investment gained 10% during one period when you had $1,000 invested and gained 10% during another period when you had $100,000 invested. The first gain adds about $100, while the second adds about $10,000. As a result, the period when you had $100,000 invested has a much greater influence on your overall MWRR.

1. Enter the date and amount of your initial investment.
2. Enter the date and amount of your withdrawal or ending investment value.
3. Select “Add Investment or Withdrawal” to include additional investments or withdrawals.
4. Select “Calculate MWRR.”

You need at least one investment and one withdrawal to calculate a money-weighted return.

An investment is money you put into the investment. It is treated as a negative cash flow.

A withdrawal is money you receive from the investment. It is treated as a positive cash flow.

Withdrawals may include:

• Money taken out of the account
• Dividends or distributions received in cash
• Income received from the investment
• Proceeds from selling the investment
• The investment’s current or ending value

For example, suppose you invest $10,000 and later sell the investment for $12,000. The $10,000 is an investment, while the $12,000 is a withdrawal.

In the calculator above, enter both amounts as positive numbers. Selecting Invest or Withdraw tells the calculator whether to treat the amount as a negative or positive cash flow.

You do not need to sell an investment to calculate its MWRR.

Enter the investment’s current value as a withdrawal dated on the final day of the period you want to measure. This represents the amount you could receive if the investment were valued or sold on that date.

Do not include the same dividend or distribution twice. For example, a distribution that remained in the account may already be reflected in its ending value.

Suppose you make the following transactions:

Your MWRR would be 10% because your investment increased from $10,000 to $11,000 over one year.

The calculation becomes more useful when you make additional contributions or withdrawals.

For example, suppose the investment gains 10% during the second half of the year:

• If you have $10,000 invested during that gain, you earn $1,000.
• If you contribute another $5,000 before the gain, you have $15,000 invested and earn $1,500.

Because the additional contribution was made before the gain in the second half of the year, more of your money benefited from the investment’s performance. This results in a higher dollar gain and affects the MWRR you personally earned.

If the $5,000 contribution had been made after the gain, it would not have benefited from that increase.

MWRR and time-weighted rate of return, or TWRR, measure investment performance differently.

MWRR is generally more useful when you want to know the return you personally earned.

TWRR may be more useful when evaluating a portfolio manager because the manager may not control when an investor deposits or withdraws money.

The two results can differ significantly when large contributions or withdrawals occur shortly before major market gains or losses.

Your MWRR is shown as an annualized percentage.

For example:

• An MWRR of 8% means your cash flows produced an estimated annualized return of 8%.
• An MWRR of 0% means the value received was approximately equal to the value invested.
• A negative MWRR generally means you received less money than you invested.

A higher MWRR generally indicates a stronger return, but it does not necessarily mean the investment involves less risk.

You can compare your MWRR with your required return or with alternatives such as savings accounts, GICs, bonds and other investments.

Make sure the investments being compared cover similar periods and have similar levels of risk.

MWRR is the discount rate that makes the present value of your investment cash flows equal to zero.

In simpler terms, the calculation finds the annualized rate of return that connects the money you invested with the money you later received, while accounting for the date of each transaction.

MWRR is commonly calculated using an internal rate of return calculation. When cash flows occur on irregular dates, an XIRR-style calculation uses the actual number of days between transactions.

Because MWRR is calculated by testing different rates until the cash flows balance, it is usually calculated with a financial calculator or spreadsheet program, like Excel.

MWRR and internal rate of return (IRR) are closely related.

MWRR is generally the IRR calculated from an individual investor’s contributions and withdrawals. The term MWRR emphasizes that the result is affected by how much money the investor had invested at different times.

When cash flows occur at regular intervals, a standard IRR calculation may be used. When they occur on specific or irregular dates, an XIRR calculation is generally more appropriate.

This calculator uses the actual dates entered for each cash flow.

For more complicated (uncertain) investments, compounded annual growth rate (CAGR), internal rate of return (IRR) and money-weighted rate of return (MWRR) are used similar to yield or interest rate.

You can use the XIRR function when you know the actual date of each investment and withdrawal:

=XIRR(values, dates)

For example, if your cash-flow amounts are in cells B2 to B5 and the corresponding dates are in cells A2 to A5, use:

=XIRR(B2:B5, A2:A5)

Unlike the calculator above, a spreadsheet does not automatically determine whether an amount is an investment or a withdrawal. When using a spreadsheet:

• Enter investments as negative values.
• Enter withdrawals and ending values as positive values.
• Include at least one negative and one positive cash flow.

MWRR can help measure the return you personally earned, but it does not provide a complete picture of an investment.

Its limitations include:

• It can be strongly affected by the timing of large contributions and withdrawals.
• It does not show your total dollar profit.
• It does not directly measure investment risk.
• Fees and taxes must be included as cash flows or reflected in the ending value to affect the result.
• Returns covering less than one year may look unusually high or low when annualized.
• Unusual cash-flow patterns may produce more than one possible result or no usable result.