How to calculate portfolio return

What a value chart actually shows

A portfolio value chart connects recorded valuations over time. Adding a holding, recording a purchase or importing transactions can change what the tracker knows about your portfolio. That movement is not automatically a return earned in the market.

This distinction is particularly important when you start tracking an existing portfolio. A small first snapshot followed by a full import can create an enormous percentage change between chart endpoints, even if none of your investments moved in price.

Start with a simple return when there are no cash flows

If you make no external contributions or withdrawals during a period, a simple return is (ending value − starting value + income paid out) ÷ starting value. Include distributed income only if it is not already in ending value. Keep fees, taxes and currency treatment consistent, and state whether the result is before or after them.

For example, shares worth $1,000 at the start and $1,050 at the end, plus $20 in cash dividends kept outside the measured position, produce a 7% return before fees and taxes. If the $20 is already included in the ending account value, adding it again would double-count income.

Time-weighted return: separate performance from deposits

Time-weighted return splits the history at external cash flows, calculates each subperiod’s return and compounds them: (1 + r₁) × (1 + r₂) × … − 1. It reduces the influence of when money was added or removed, making it useful for comparing investment performance on a consistent basis.

Suppose $1,000 grows to $1,100 in the first year, then you add $500. In the second year the $1,600 falls to $1,440. The subperiod returns are +10% and −10%, giving 1.10 × 0.90 − 1 = −1% across the two years. That is a cumulative figure, not an annualized rate.

Reference: CFA Institute: time-weighted and money-weighted returns.

Money-weighted return: include the size and timing of your cash flows

Money-weighted return reflects when and how much you invested. It is commonly calculated as an internal rate of return. For irregular dates, an XIRR-style calculation uses each contribution, withdrawal and the final portfolio value with its date. Contributions are negative from your perspective; money received and the ending value are positive.

Using the same two-year example, record −$1,000 at the start, −$500 one year later, and +$1,440 at the end. More money was exposed during the losing year, so your money-weighted experience differs from the −1% time-weighted result. Check whether the output is annualized before comparing the two methods.

Reference: GIPS Standards: money-weighted return and external cash flows.

Read PortfolioX’s chart and gain figures separately

In PortfolioX, use the value-chart period selector to inspect a longer or shorter history. Changing that timeframe changes the chart’s window; it does not turn the current portfolio gain into a cash-flow-adjusted return for that window.

Use the current portfolio figures alongside your holdings and transaction history. Before investigating an unexpected result, check units, purchase prices, transaction dates, sales and currencies. Importing a screenshot can save entry time, but the extracted information still needs your review.

Check the holdings behind the account value

Return calculations depend on a complete record, not just a formula. Match your symbols and share counts to the correct listings, then check purchase prices, dates, cash movements and currency. A public company chart cannot reconstruct your personal purchase history.

Apple’s market page helps identify the company and listing behind an AAPL holding.

Alphabet’s market page is a reference for checking a GOOGL holding; match the share class to your broker record.

Meta’s market page shows market information separately from the price and date at which you personally invested.

Common mistakes to avoid

• Calling every increase in the value chart an investment gain.
• Assuming a newly imported holding represents a profit earned that day.
• Comparing a current holding gain with a period return calculated using a different method.