9 thoughts on “How to Calculate Personal Rate of Return (Time-Weighted Rate of Return)”

  1. I would be interested in seeing your excel spreadsheet.

    I’ve seen two ways to calculate rate of return. The first is from the Association of Investment Management and Research (AIMR) in Charlottesville, Virginia. Their calculation is :

    Monthly Return = (EB – ½C + ½W) / (BB + ½ C – ½W)

    where BB is beginning balance, EB is ending balance. C is contribution during the period and W is withdrawal in the period.

    The other, which I think may be better, uses the XIRR function in Excel. I think it is better since it allows contributions/withdrawals that are more time dependent within the period being measured. It takes an annualized value (provided by XIRR) and converts it to a given period value. The formula is:

    ((XIIR result)+1)^((Ending date – Starting Date)/365)-1

    ^ is power of in Excel. Ending date – Starting Date gives you the number of days being used in the measurement.


  2. HI,

    I am a new reader of your blog and I find it really useful, maybe few months or years down the line I will also start a financial blog of mine 🙂

    If you can send the excel file to me I’d like to use it, though I dont invest right now.

    I am in the earning phase right now 🙂

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  4. Dear Sir:
    1. I want to know the excell sheet of Economic Rate of Return where the input value will be 1 time capital cost, 20 years Overhead and maintenance cost = total cost, and my benefits are ( Increasing land value, Increasing trade and business, saving Maintenance cost= total Benefits) and last Net Benefits after Finding out I will figure out whether I will invest for the Road or not for construction.

    (Non Revenue Project)
    PV = 12%, year 20 years
    Economic Rate of Return
    Benefit Cost Ratio
    Net Pesent Value

    2. Financial rate of Return of Construction of a building Input [One time capital cost O & M Cost for 20 years, Sell of Room, Rental value of rooms= total income, lastly Net Income all will decide me whether I will go for the construction or not,
    (Revenue Generating Project)

    NPV Discount factor = 8%, year 20 years
    Financial Rate of Return
    Benefit Cost Ratio
    Net Pesent Value

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