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Anonymous
Hi! I'm using Stashaway but am unsure what is the difference between Money-weighted return % vs Time-weighted return %? Which should I be looking at?
I'm depositing monthly $200 to stashaway and currently the value is $1651.50, and net deposit is $1600. The total return is $51.50 - why is my Money-weighted return 6.36% and Time-weighted return 7.72%? Which should I be looking at and how are these values generated? Thanks!
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Stashaway user here. I asked the same to stashaway team. And what I gathered is money weighted return is more significant to me. It takes into consideration of the various deposits and withdrawals (cashflows) at different times. Sort of like what wuld be the actual yield at that point in time.
https://www.investopedia.com/terms/m/money-weig...
https://www.investopedia.com/terms/t/time-weigh...
maybe more experts can throw light in this subject.
p/s i have also ask why they do not put in a annualised return. which i think it will be more useful. forgot what their reply was. maybe should ask them again.
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Overall the method of calculation is a bit of philosophy, should be in praxi not so relevant and different anyway some more info here: http://www.rbcphnic.com/_assets-custom/pdf/unde...