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How do you calculate the return on investments?

We calculate the return on investments using Time-Weighed Return (TWR). We also use Money-Weighted Return (MWR).

There are different methods to calculate returns such as time-weighted return, money-weighted return, internal rate of return and simple return. Among these, we believe that the time-weighted return is the best method to convey the performance of your QuietGrowth portfolio.

About TWR

TWR is the compound rate of daily return. TWR shows how effectively QuietGrowth has managed your investments since your first deposit to your portfolio. It does not consider when you have executed your deposits and withdrawals, and this should be the case when measuring our performance in managing your QuietGrowth Portfolio. This is because you, not QuietGrowth, control when you deposit or withdraw cash.

Moreover, it is preferable that the performance of QuietGrowth portfolios is calculated similarly to how the performance of an index fund is calculated, and index funds use TWR.

About MWR

MWR is a measure of portfolio performance since your first deposit to your portfolio, while considering your timing of the deposits to and withdrawals from the portfolio.

Suppose you have a financial goal for your portfolio that sets the expectation for the portfolio to grow at least X% annually to reach that goal. Then, you can assess from MWR if you are ahead or behind your goal.

MWR helps measure how efficiently your actual deposit and withdrawal behaviour has contributed to achieving your financial goal for the portfolio. Meanwhile, TWR measures how well QuietGrowth manages your portfolio regardless of the cash flow timing that you control.

Annualised money-weighted return is also referred to as internal rate of return (IRR).

About Simple Return

We do not suggest using the simple return.

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