Dollar Weighted Average Calculator
Introduction & Importance
Dollar-weighted average is a method used to calculate the average rate of return for an investment over a period of time…
How to Use This Calculator
- Enter your investments in the ‘Investments’ field, separated by commas.
- Enter the corresponding returns in the ‘Returns’ field, separated by commas.
- Click ‘Calculate’.
Formula & Methodology
The dollar-weighted average (DWA) is calculated using the following formula…
Real-World Examples
Example 1
Let’s say you invested $10,000 at the beginning of the year and another $5,000 halfway through the year…
Data & Statistics
| Investment | Return |
|---|---|
| $10,000 | 5% |
| $5,000 | 3% |
Expert Tips
- Always consider the timing of your investments when calculating average returns.
- Dollar-weighted average is a more accurate measure of performance for investors with varying investment amounts.
Interactive FAQ
What is the difference between dollar-weighted average and simple average?
Dollar-weighted average takes into account the size of each investment, while simple average does not.
For more information, see the Investopedia guide and the BLS report.