Understanding Returns and TWR

Why Return Calculations Matter

When tracking P2P investments, simply looking at "total interest earned" doesn't tell the full story. You need to understand your actual rate of return to:

• Compare performance across platforms
• Evaluate if your investments are meeting targets
• Make informed decisions about where to allocate capital

The Problem with Simple Returns

Imagine you invest €10,000 and earn €800 in interest over a year. Is that an 8% return?

Not necessarily. What if:

• You only had €5,000 invested for the first 6 months?
• You added €5,000 halfway through the year?
• You withdrew €2,000 in month 9?

Cash flows change your effective return rate significantly.

Time-Weighted Return (TWR)

Time-Weighted Return is the industry-standard method for measuring investment performance. It eliminates the impact of cash flows (deposits/withdrawals) to show the "true" performance of your investments.

How TWR Works

1. Divide the investment period into sub-periods (typically months)
2. Calculate the return for each sub-period
3. Compound all sub-period returns together

The Formula

For monthly data:

Monthly Rate = (Interest + Bonuses - Fees - Writeoffs) / Portfolio Amount
Annual TWR = [(1 + Jan Rate) × (1 + Feb Rate) × ... × (1 + Dec Rate)] - 1

Example Calculation

Annual TWR = (1.0076 × 1.0080 × 1.0076 × 1.0081 × ...) - 1 ≈ 9.5%

Gross vs Net Returns

Gross Return

Interest + Bonuses only. Shows the platform's stated performance.

Net Return

Interest + Bonuses - Fees - Writeoffs. Shows what you actually keep.

Always track both to understand the true cost of investing on each platform.

Using TWR in Crowdlending Hub

Our platform automatically calculates TWR for you:

1. Enter Monthly Data: Log your portfolio amount, interest, fees, and writeoffs
2. View Dashboard: See your TWR for each platform and overall portfolio
3. Compare Platforms: Identify which investments are truly performing best

Tips for Accurate Tracking

• Be Consistent: Enter data at the same time each month
• Include All Fees: Platform fees, late payment fees, currency conversion fees
• Track Writeoffs: Record any loans that default or are written off
• Note Bonuses: Cashback and referral bonuses can boost returns

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Start tracking your returns accurately with our free dashboard.