Performance

Answer your questions about investment returns, dividends, and comparisons

Table of Contents

How it works

What aspects of performance should I view besides market returns?

It’s important to consider that, while the time-weighted return may be the most helpful type of return figure to use when evaluating your portfolio manager, there are many other factors you should consider when evaluating your portfolio manager. Taxes saved now or at withdrawal from our services like TaxMin, Tax Loss Harvesting+, or Asset Location aren’t reflected in pre-tax returns. Also, you should not expect your time-weighted return over a short time horizon to be representative of the ...

Read More

Types of returns

What are simple earnings?

Your simple earning is simply the ratio of the earnings in your account to your net deposits. Earnings include market changes (in either a positive or negative direction), dividends, and fees. Your net deposits are your deposits minus your withdrawals over a given time frame. Simple Earnings = Earnings ÷ Net Deposits Because your simple earning is easy to calculate, we know it can be tempting to use it to judge your portfolio’s performance—but in fact, it can be quite misleading. When you see ...

Read More

What are time-weighted returns?

When people look at their returns, one goal is to understand how well Betterment is managing their money. If you want to judge how well Betterment has built your portfolio, the time-weighted return (TWR) is one of the most useful figures to use. When you log into your Betterment account from a web browser and go to the Performance section, at the top right you’ll see your time-weighted return. If you’re logged in on the mobile app, tap “See performance,” and your time-weighted return will be ...

Read More

What is an internal rate of return?

The other money-weighted return figure displayed in your account is the internal rate of return, or IRR for short. It is certainly more useful than the simple earnings figure. But, it is also not the best figure to use to understand how well Betterment is managing your money (TWR is), because it includes the impact of your deposits and withdrawals. IRR does a better job of answering the question, “What are the average returns on the dollars I personally deposited into Betterment?” as opposed to ...

Read More

What are money-weighted returns?

Money-weighted returns are affected by every cash flow that goes in and out of your portfolio. Cash flows at Betterment include deposits, withdrawals, dividends, and fees. We provide two types of money-weighted returns figures: simple earnings and internal rate of return (IRR).

Read More