Is Trading 212's return percentage wrong?

It is not miscalculated. It is a simple return: the current value of your portfolio compared with the total you have paid in. That is a correct answer to the question 'how much money have I made', and a misleading answer to the question 'how well have my picks performed', because money you deposited last week is treated the same as money that has been invested for three years.

What is time-weighted return?

Time-weighted return breaks the period into segments at every deposit and withdrawal, calculates the growth of each segment, and links them together. Because each segment is measured on the money that was actually invested during it, the size and timing of your deposits cancel out. It is the standard used to compare funds, and it is what lets you compare your portfolio with an index.

Which return number should I look at?

They answer different questions, so most people want both. Money-weighted return tells you what happened to your money, including the effect of when you added it. Time-weighted return tells you how the holdings performed independent of your deposit timing, which is the only one of the two you can fairly compare with the S&P 500.

Does this affect my tax reporting?

No. Tax is calculated on realised gains and dividends received, not on any percentage your broker displays. The return figure is a performance measure, not a tax figure, and neither of the two methods described here changes what you owe.

Why your Trading 212 return percentage is wrong

Your broker says you are down 1%. You had a good year — one holding ran up 20% before the summer — and the number on the screen does not reflect any of it. Nothing is broken. The percentage is answering a question you did not ask.

Trading 212, Revolut, most brokers and roughly every spreadsheet anybody has ever built show the same thing: your portfolio’s current value against the total you have paid in. It is the most obvious calculation available, and for a lump sum invested once and left alone it is exactly right.

It stops being right the moment you make a second deposit.

The calculation your broker is doing

Add up every euro you have deposited. Compare it with what the account is worth now. The difference, as a percentage, is your simple return.

simple return = (current value ÷ total deposited) − 1

The flaw is in the denominator. It counts a deposit made last Tuesday and a deposit made three years ago as the same euro. One of them has had three years to compound. The other has had six days. The formula cannot tell them apart, so every time you add money, the percentage falls — not because anything you own lost value, but because the divisor grew and the numerator has not caught up yet.

This is why a portfolio can post a run of good months and show a falling percentage throughout. If you contribute monthly, you are diluting the figure on schedule.

A year where every number is different

Take one year, two deposits, and no trading at all.

1 January — you deposit €10,000.
30 June — the market has been kind. It is worth €12,000, up 20%.
1 July — you deposit another €10,000. The account holds €22,000.
31 December — the second half was rough. Everything is down 10%, and the account is worth €19,800.

You put in €20,000 and finished with €19,800. Your broker shows:

(19,800 ÷ 20,000) − 1  =  −1.00%

Now measure the same year a different way. Break it at the deposit and look at what the invested money did in each half:

first half   10,000 → 12,000     ×1.20
second half  22,000 → 19,800     ×0.90

1.20 × 0.90 = 1.08          →  +8.00%

Same year. Same holdings. Same investor. One method says −1%, the other says +8%, and neither of them is a mistake.

Why the gap is that wide

Because the second deposit landed immediately before the fall. Half your money was exposed to the 20% rise; all of it was exposed to the 10% drop. The euro-weighted arithmetic picks that up, and it should — it is a real thing that happened to your real money.

What it is not is a measurement of the holdings. Had you made the same deposit on 1 January instead, every position would have behaved identically and your simple return would have been +8%. The 9-point difference is entirely a fact about your deposit calendar.

The two names for the two numbers

	Money-weighted	Time-weighted
Answers	What happened to my money?	How did the holdings perform?
Deposit timing	Included — it is the point	Cancelled out
Also called	IRR, XIRR, personal rate of return	TWR, the fund-manager standard
Our example year	−1.33%	+8.00%
Comparable to the S&P 500	No	Yes

The simple return your broker shows is a rough approximation of the money-weighted family. The exact version, IRR, solves for the single annual rate that reconciles every dated cash flow with your ending value; for the year above it lands at −1.33% rather than the −1.00% the simple formula gives, because it knows the second deposit was only invested for six months.

Time-weighted return is the other one. It chops the period at every deposit and withdrawal, measures the growth within each segment on the money that was actually invested during it, and multiplies the segments together. Deposits cannot distort it, because a deposit ends one segment and starts the next rather than landing inside either.

This is the number funds publish, and it is the reason they can be compared with one another at all. A fund receives inflows and redemptions daily and has no control over either; measuring it money-weighted would score the manager on their investors’ timing.

Where this actually bites

Comparing yourself with an index. “The S&P 500 did 11% and I did 4%” is not a finding if your 4% is money-weighted, because the index has no deposits — nobody is paying into the S&P 500 every payday. You are holding a number that includes your contribution schedule up against a number that has no contributions in it.

Line them up correctly and the comparison often flips. A year of steady monthly contributions into a rising market produces a money-weighted figure well below the index and a time-weighted figure that may sit right on top of it.

So which one do you want

Both, for different sentences.

Money-weighted when the question is about your money. How much do I have, how much did I put in, how did this go for me. It is the honest answer to “how am I doing” and it does not let you off for having bought in at a high.
Time-weighted when the question is about the holdings. Did my picks keep up with the index, is this strategy working, how did last year compare with the one before it.

The mistake is not using one of them. It is using one of them to answer the other one’s question — which is what happens by default, because the simple return is the only figure most brokers show you.

HaboFi calculates both from your Trading 212 CSV export and plots your time-weighted return against the S&P 500 on the same axis, so the two lines are measured the same way. No broker login — you upload the file you already have.

Try HaboFi free

Doing it yourself

Money-weighted is a spreadsheet job. List every deposit as a negative amount with its date, put your current value as a positive on today, and run XIRR over the two columns. That is the whole calculation.

Time-weighted is harder, and the difficulty is data rather than mathematics. You need to know what the portfolio was worth on every day you moved money — the day before the deposit, to close the segment. Almost nobody has that written down, and reconstructing it means repricing your historical holdings at historical prices on each of those dates. It is the reason time-weighted return is normally left to software, and the reason your broker shows you the simple number instead.

This article is general information about how these calculations work. It is not financial, investment or tax advice, and nothing in it is a recommendation to buy or sell any security. See our terms.