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? - Seedly
Seedly logo
Seedly logo
 

Stocks Discussion

Investments

Savings

Lifestyle

Payments

Retirement

StashAway

Anonymous

Asked on 03 Feb 2020

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!

0 comments

2 answers

Answer Now

Answers (2)

Sort By

Most Upvote

  • Most Upvote
  • Most Recent
CH
CH
Level 6. Master
Answered on 03 Feb 2020

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-weighted-return.asp

https://www.investopedia.com/terms/t/time-weightedror.asp

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.​​​

1 comment

👍 1
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

03 Feb 2020

When you have several investments at different time points it is not so easy a calculate a total annualized return, but only easy to calculate that for the individual investments.
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (Feb)

Level 8. Wizard
Updated on 03 Feb 2020

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/understanding-differences-between-twrr-mwrr-eng.pdf

0 comments

👍 0