How is a Time-Weighted ROR different than a Dollar-Weighted ROR?
A. A Time-Weighted ROR differs from a Dollar-Weighted ROR in the following ways: 1. Time-weighted returns split up the time for which a return is going to be calculated into equal sub-periods. The IRR does not split up the time period into equal sub-periods; instead it searches for a constant rate of return for one entire time period. The Investment Performance Calculator uses monthly sub-periods to perform its time-weighted calculation. 2. Time-weighted returns calculate the value of a portfolio or investment for each sub-period. The IRR does not. For a time-weighted return to be calculated accurately it requires keeping the historical values of the investment for the beginning and end of each sub-period. To calculate time-weighted returns accurately with The Investment Performance Calculator you should enter the historical value for every investment monthly. 3. Time-weighted returns calculate the IRR for each sub-period. As previously mentioned this requires keeping the historical va
