Portfolio Return Calculator (CAGR & MWRR)

What Is a Portfolio Return Calculator?

A portfolio return calculator translates raw numbers — what you started with, what you ended with, and how long it took — into an annualized percentage that tells you how your investments actually performed. That single number, expressed as a percentage per year, lets you compare your portfolio against a benchmark, track progress over time, and make informed decisions about your investment strategy.

There are two fundamentally different ways to measure portfolio return, and choosing the wrong one leads to misleading results. This calculator handles both.

How the Calculation Works

CAGR — No Contributions

If you invested a lump sum and made no additional deposits or withdrawals, the Compound Annual Growth Rate (CAGR) is the correct measure:

CAGR = (Ending Value ÷ Starting Value)^(1 ÷ Years) − 1

For example: $10,000 growing to $18,000 over 6 years gives a CAGR of (18,000 / 10,000)^(1/6) − 1 = 10.3% per year.

CAGR is a smoothed rate — it tells you what constant annual return would have produced the same result, regardless of what actually happened year by year.

MWRR — With Regular Contributions

If you made regular contributions (monthly, quarterly, or annually), CAGR becomes misleading because it ignores the timing of those deposits. Instead, the Money-Weighted Rate of Return (MWRR) — equivalent to the XIRR function in Excel — gives the correct answer.

MWRR treats all cash flows as a series of dated transactions and solves for the single discount rate that makes the net present value of all inflows and outflows equal to zero. The formula cannot be solved directly, so this calculator uses the Newton-Raphson iterative method to converge on the answer within milliseconds.

Inputs treated as cash flows:

• Negative: starting value, each contribution (money going in)
• Positive: ending portfolio value (money “coming out” as of the end date)

A Worked Example

Scenario: You started with $20,000 on January 1, 2022, contributed $500/month, and your portfolio is worth $42,000 on April 27, 2026.

• Period: ~4.3 years
• Total contributions: 20,000 + (51 months × $500) = $45,500
• Ending value: $42,000
• Total gain/loss: −$3,500 (the portfolio is worth less than you put in)

In this case the MWRR would be negative — a loss in money-weighted terms even though the portfolio grew in absolute dollar terms, because contributions came in at prices that didn’t recover. This is the honest picture of your personal experience.

Run the same numbers without contributions: $20,000 → $42,000 over 4.3 years gives CAGR of about 9.5% — a very different story, and the right number only if that $22,000 growth came from your $20,000 seed with no additional deposits.

CAGR vs. MWRR: Which Return Should You Track?

Use CAGR When:

• You invested a lump sum and haven’t added to it
• You want to evaluate how a specific investment or fund performed
• You’re comparing funds against each other or against an index
• You want to match what financial publications report (fund managers report TWRR/CAGR, not MWRR)

Use MWRR When:

• You dollar-cost average regularly into your portfolio
• You want to know what you personally earned, given when you actually deployed capital
• You’re evaluating the real-world outcome of your investing behavior

Why the Difference Matters

Imagine two investors. Both hold the same fund that returned 12% per year over 5 years. Investor A put in all their money on day one and earned close to the fund’s 12% CAGR. Investor B added money during a bull market peak and withdrew some during a downturn — their MWRR might be 6% or even negative, because most of their capital was deployed at high prices.

Same fund. Same time period. Wildly different personal outcomes. MWRR captures Investor B’s true experience; CAGR captures the fund’s performance in isolation.

Benchmarking Your Return

Once you have your annualized return, compare it to a relevant benchmark for the same period:

A 9% return sounds great in isolation. If the S&P 500 returned 15% over the same period and your portfolio is 100% equities, 9% suggests underperformance. If you hold a balanced 60/40 portfolio and the blended benchmark returned 8%, you beat it.

The Role of Time

Short periods distort annualized returns dramatically. A portfolio that gains 20% in 6 months shows a CAGR of 44% — impressive on paper, but based on a single data point with no statistical meaning. Annualized returns become meaningful after at least 3 years and more reliable after 5+.

What the Return Doesn’t Tell You

Annualized return alone omits:

• Volatility: Two portfolios with the same CAGR can have dramatically different year-by-year swings. The Sharpe ratio adjusts return for risk.
• Taxes: Realized gains, dividends, and interest are taxed differently. Pre-tax and after-tax returns can diverge substantially.
• Fees: If your broker charges 0.75% annually, subtract that from your gross return to get the net figure.

Key Assumptions and Limitations

Regular contributions are assumed to be evenly spaced. If your actual contribution dates varied, the MWRR approximation here will be close but not exact. For precise XIRR with irregular dates, use the XIRR function in Excel or Google Sheets.

The ending value should reflect market value, not cost basis. Use the current market value of your entire portfolio — equities, bonds, cash held in the account, and reinvested dividends — not what you paid for your holdings.

The calculator covers a single account. To calculate return across multiple accounts, you would need to aggregate cash flows from all accounts into a single XIRR calculation.