Link growth factors after removing each flow
For a row with beginning value B, ending value E including the external flow, and end-period flow C, its growth factor is (E − C)/B. Positive C means a contribution and negative C means a withdrawal. Overall TWR equals [the product of all row factors − 1] × 100%. Every next beginning value must match the previous ending value within a relative tolerance of 1e−8. Beginning values must be positive; zero post-flow investment value represents a total loss.
A contribution between two investment periods
Start with 100. After a 10% investment gain, add 50, giving a first ending balance of 160. The first factor is (160 − 50)/100 = 1.10. In the next period, begin at 160 and end at 176 without an external flow, giving another factor of 1.10. Linked TWR is 1.10 × 1.10 − 1 = 21%. The raw balance increase of 76% mixes investment performance with the contribution.
Use valuations at the right moments
An external flow halfway through a row does not satisfy this calculator's end-period convention. Split the record at that flow using the corresponding valuation, or use an explicitly approximate method when the valuation is unavailable. Fees paid inside the portfolio normally affect performance rather than becoming investor contributions. Consistent treatment of account transfers and liabilities is essential. Calculating this formula alone does not establish GIPS compliance, which involves broader requirements for valuation, presentation, and firm practices.