Calculating Your Money-Weighted Rate of Return (MWRR)

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Information Calculating Your Money-Weighted Rate of Return (MWRR)

Title	:	Calculating Your Money-Weighted Rate of Return (MWRR)
Lasting	:	7.43
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Comment from : @JustinBenderCPM

Excellent video However, I strongly disagree with the closing "Key Takeaway" statement Moreover I think the "Key Takeaway" statement is in complete discord with the lesson of the videos distinguishing TWRR and MWRR The "Key Takeaway" states: "Depending on market conditions, if you happen to add or remove money to or from your portfolio (account) at just the "right" or "wrong" times, your money-weighted rate of return can significantly over- or understate YOUR performance for the year" NO The MWRR IS YOUR RATE OF RETURN PERIOD The last section of this statement should be modified to read "can significantly over- or understate the performance OF THE ASSETS IN YOUR PORTRFOLIO (OR ACCOUNT)" The lesson of these videos on TWRR and MWRR is that the MWRR is in fact YOUR PERSONAL RATE OF RETURN OR PERFORMANCE and that the TWRR is the performance of the assets in your portfolio or account YOUR RATE OF RETURN OR PERFORMANCE is strongly affected by YOUR personal financial behavior which is reflected in YOUR cash flow and buy/sell history Research by Vanguard and Morningstar typically shows that an investor's personal performance (which is all that is important to that investor) as measured by MWRR is lower than the TWRR of the underlying assets within the account or portfolio The magnitude of the difference between MWRR and TWRR is also positively correlated with the volatility of the underlying assets That is, as the volatility of the underlying assets increase, unfortunately the difference between MWRR and TWRR typically increases due to investors' poor financial behavior of selling when asserts are down and buying when they are high, much like Buster in these videos
Comment from : @JayWhite-d1q

Does Excel actully deal correctly with the time/date input column?
Comment from : @Kritikanbringer

How do you do in numbers , apple
Comment from : @diana7676

Awesome video
Comment from : @okechukwuutazi9373

very clear when you watch the two videos
Comment from : @hishamalhashmi7394

Perfectly explained! Thanks!
Comment from : @micno2076

Great video!
Comment from : @OscarWithC

Excellent explanation; much more clear than how this is explained in the CFA curriculum
Comment from : @Pieter2360

such an awesome teacher you are liked and subbed
Comment from : @vijayreddy301

I don't understand the point of MWRR What can I do with the figure it calculates? I have an account that shows 15 growth using MWRR but ust 8 simply comparing nd value to initial With the 8 figure I can compare the performance to other things such as savings accounts but the 15 figure??? it takes into account investment timing but can't predict when to invest What do I use the 15 for??
Comment from : @boojiboy16

Can you calculate it using financial calculator ?
Comment from : @lh7766

I hate math but I love financial math
Comment from : @tonythegreat4275

well articulated with examples Thank you Justin
Comment from : @shaikshb

shouldnt of used excel
Comment from : @jamesupton7555

Amazing Illustration and discussion
Comment from : @romitbarat

Great explanation Many thanks Subscribed
Comment from : @AurelioPita

This sounds like the same exact thing as IRR why do people make up multiple names makes no sense to me lol
Comment from : @scooby7877

Thank you very much again as it helps me to understand more re calculating for the rate of return May i ask you when it's Cash Portfolio, holding term deposits and Term Annuities, what would be the appropriate method to calculate the performance returns of this cash portfolio
Comment from : @chariscchi3140

The best explanation of MWRR I have ever heard, thanks!
Comment from : @danielbarrett8560

Thanks for doing this, very clear! As a nerd I guess I would have loved to see the math in the same way you did for time weighted rate of return, but still thanks so much!
Comment from : @legomgom

Hey Justin, if I calculate the MWRR per year, 2020, 2021, etc -> how with this MWRR of each year I can calculate my cumulative total return of all my portafolio since day 1?brbrI have my personal portafolio and each month I make contributionsbrbrThanks in advance 🤗
Comment from : @userm1207

How does this apply if I sometimes have cash on my brokerage account and my contributtions are actually cash deposits into the brokerage account to be invested in a later date? Ex: I deposit $3000 every 6 months (equivalent to $500/month), after I deposit this money slowly invest that money up to $500 per month, if i encounter a huge dip i may invest more than $500 or even all of the remaining cash If i end up with no cash i just wait until the 6 months are up and repeat depositing $3000 I do this to reduce deposit fees, ideally i would invest monthly, but I rather pay fees twice a year than 12 times a year
Comment from : @dxelson

Excellent illustration
Comment from : @zacalhaj

Hi Justin, can I check with you, regarding the XIRR formula in excel, if the dates are more than 1 year (eg 3 years), it would only calculate annualised returns right? How can I calculate my total returns? just simply x3 in this case?
Comment from : @piranhaprofitsleo

Why does the Excel tutorial on that XIRR function say the starting amount needs to be negative? (the one from Microsoft Help)
Comment from : @thechickenduck8377

Excellent presentation! MWRR seems like an important consideration for investors especially when measuring their wealth advisor’s performance Probably why they include it as part of the CRM2 year end statement Here’s something I never read about: Question: What is the opportunity cost of the wealth advisor’s fee coming out of accounts? Example: Dividends and capital gains reinvested vs systematically taking out fees from the firm/advisor Seems costly over time even at 1 Wouldn’t it be more prudent to pay an advisor separately and let investments compound at their maximum over time?
Comment from : @lpgoog

Is it not a strange choice of the CSA to make MWRR the standard?
Comment from : @skube

I still think Micahel should have been Gob, and Gob should have been Michael, cuz Michael is the smart one
Comment from : @maximeleroux5286

Is there an easy way to find out what your portfolio was worth on a certain date? (I'm on Quest)brbrThanks for a great video, Justin!
Comment from : @bdvd