Portfolio Return Calculator
Calculate the weighted average return of your investments.
Portfolio's Weighted Average Return
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Measuring Your Portfolio's Performance
A diversified investment portfolio contains multiple assets, each contributing differently to the overall performance. The weighted average return is the best way to measure your portfolio's total return because it considers the proportion (or 'weight') of each asset. This calculator simplifies the process, allowing you to input each asset's allocation and expected return to see a single, meaningful number that represents your entire investment strategy's performance.
Frequently Asked Questions (FAQ)
What is a portfolio's weighted average return?
The weighted average return is the overall return of an investment portfolio. It accounts for the fact that different assets in the portfolio usually have different allocations or weights. It provides a more accurate picture of performance than a simple average of the returns.
How is portfolio return calculated?
To calculate the weighted average return, you multiply each asset's allocation (as a percentage of the total portfolio) by its expected return. You then sum up all these weighted returns to get the total portfolio return.
Why is it important to calculate your portfolio return?
Calculating your portfolio's return is crucial for tracking your progress towards your financial goals. It helps you understand how your asset allocation strategy is performing and allows you to make informed decisions about rebalancing or adjusting your investments.
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