"What is my return?" has several right answers — and that is the source of a stubborn confusion: two perfectly honest calculations, applied to the same portfolio, give two different figures. Neither is wrong, and neither is "the real one": they answer different questions.
Simple return — the one Everyfolio shows
Gain divided by cost: the most direct calculation. In the app, that is exactly what you see —
- a position's percentage: its unrealized gain divided by its cost basis;
- a portfolio's total return: realized + unrealized + dividends, relative to the capital invested;
- the period report presents the realized amounts and dividends for the chosen period — dated amounts, not rates.
Its question: "how much has my money returned, in total, since I invested it?" Its limit: it ignores time. A +20% earned in one year and a +20% earned in ten years display the same figure.
Annualized return — the same one, brought back to a year
Annualizing converts a total return into a "per-year equivalent", to make different durations comparable: +20% over ten years is roughly +1.8% per year; over one year, it is +20%. Same data, different unit. Everyfolio does not show an annualized figure today — the app's number is the total since your transactions.
Time-weighted, money-weighted — the real fork
This is where two honest calculations diverge, and the cause is precise: deposits and withdrawals.
- Time-weighted: measures the performance of the investments by neutralizing money movements — as if a single dollar had stayed invested throughout. That is the usual convention for judging a fund or a manager, who does not decide when clients deposit.
- Money-weighted (the internal rate of return): takes into account the timing of each deposit and withdrawal. It is the lived experience of your money: depositing a lot just before a decline weighs on that figure, even if the investments themselves behaved well.
A neutral worked example
- Year 1: a $1,000 deposit; the market does +10% — the account is worth $1,100.
- Start of year 2: a $9,000 deposit — the account is worth $10,100; the market does −5% — the account ends at $9,595.
- Time-weighted: (+10%) then (−5%) compounded ≈ +4.5% — the investments' performance, deposits neutralized.
- Money-weighted: $10,000 deposited in total, final value $9,595 — the lived experience is a loss, because the large deposit arrived just before the decline.
Both figures describe the same account. The first answers "how did the investments perform?", the second "how did MY money fare?" An institution's statement may show one, the other, or both — the method is normally indicated in a note.
What this changes for your tracking
Prices are not yet shown in the app; they will be at launch.
When Everyfolio's figure differs from your statement's, the first question is not "which one is wrong?" but "which one calculates what?" The app shows a simple total return, from your transactions, with no annualization and no weighting; your institution often shows a weighted figure (by time or by money) over a standard period. Different figures can all be exact — each within its own definition.
Informative, general content — not personalized advice. For your situation: your institution or an advisor.
Challenge: check my understanding
With an account, the challenge opens: four questions on this article, and a state that follows you.