At Airo, we use the Time Weighted Return (TWR) method to calculate your investment returns. This method helps us provide a clearer picture of how your portfolio is performing over time, independent of any deposits or withdrawals you make.

Imagine TWR as measuring the performance of your portfolio as if all your money was invested from day one. This approach levels the playing field by ignoring when you added or withdrew funds, focusing purely on how the investment itself has grown or shrunk. It's different from just looking at total gains versus initial investment, which doesn't account for the timing of cash movements.

To help explain how deposits and withdrawals affect your TWR, let's look at a simplified example:

John initially invests $1,000, which grows by 50% to $1,500. Later, he adds $30,000 to his investment. His account balance then is $31,500.

If his portfolio loses 10% afterward, it decreases by $3,150, leaving him with $28,350.

Though John sees an overall loss from his total deposit ($31,000 total deposit - $28,350 = -$2,650 loss), the TWR reflects the portfolio's initial 50% growth and subsequent 10% loss without being skewed by the large deposit. This method highlights the real performance of your investments, ensuring you get a fair view of how they're doing, day by day.