How to Track Investment Performance

Tracking investment performance means measuring how much an investment has grown, over what time, after accounting for money you added or took out. Done consistently, it separates what the market did from what your own decisions did.

The measures that matter

Total return = (ending value + income received − starting value) ÷ starting value Annualised return = (ending value ÷ starting value)^(1 ÷ years) − 1

A worked example

An investment starts at 10,000 and is worth 13,310 three years later, with no income received and no money added or withdrawn.

• Total return = (13,310 − 10,000) ÷ 10,000 = 33.1%.
• Annualised return = (13,310 ÷ 10,000)^(1/3) − 1 = 1.331^(1/3) − 1 = 10.0% a year.

Annualising matters because a 33.1% gain over three years and a 33.1% gain over ten years are very different results.

Why contributions complicate things

The formulas above assume you added no money. If you did, simply comparing the starting and ending value overstates performance. Suppose you start with 10,000, add 10,000 later, and end with 23,000. The gain is 23,000 − 20,000 = 3,000, not 13,000.

Two standard approaches handle this. A time-weighted return removes the effect of when you added money and measures the investment itself. A money-weighted return reflects the timing of your deposits and withdrawals, and so measures your own experience. They answer different questions, so say which one you are reporting. Our Investment Return Calculator covers the simple, no-contribution case; it does not calculate either of these.

What to compare against

A return only means something against a reference. Useful references include an appropriate market index for the kind of assets you hold, inflation (to see the real return) and your own plan's required rate. Compare like with like: a portfolio of bonds should not be judged against an equity index.

Common mistakes

• Ignoring income. Leaving out dividends or interest understates return.
• Ignoring costs and taxes. Fees and taxes reduce what you keep; measure after them where you can.
• Mixing time periods. Compare annualised figures, not raw totals over different lengths.
• Judging on short periods. Short-term results are noisy and say little about the quality of a decision.

Related reading: how asset allocation shapes results.

Run the numbers

Calculate an investment return → Also relevant: Compound Interest Calculator.

Want to track this over time? WorthMorrow is being built to help you track expenses, net worth, investments and financial progress in one private workspace. The tools are not yet available; see WorthMorrow Tools for their status.