# How to Calculate Dollar-Weighted Investment Returns i Digital Vision./Digital Vision/Getty Images

If your investment's principal and growth rate change within a single period, you can calculate your returns in a two different ways. Time-weighted investment returns calculate the average growth rate on the investment, considering only the rates and the duration for which each acts. Dollar-weighted returns, however, give greater importance to rates that act on higher principals. Dollar-weighted returns clearly state your actual returns but do not clearly describe the investment's performance independent of your deposits and withdrawals.

## Step 1

Subtract the investment's value at the beginning of the period that you are analyzing from its value at the end of the period. For example, if an investment of \$10,000 grows to \$12,000, subtract \$10,000 from \$12,000 to get \$2,000.

## Step 2

Divide this difference with by the investment's value at the beginning of the period. Continuing the example, divide \$2,000 by \$10,000 to get 0.2.

## Step 3

Multiply this ratio by 100 to convert it to a percentage. 0.2 multiplied by 100 gives a dollar-weighted return rate of 20 percent. This value is accurate no matter how long the growth took or how the growth rate varied over the course of this time.