How to use the calculator
- Add up to 10 holdings: start typing a ticker or company name and pick it from the list, then enter its weight in percent. Weights should add up to 100%.
- Enter the starting amount, an optional monthly addition, and the start month. The earliest start is set by the holding with the shortest history.
- Choose how often to rebalance back to your weights, and a ticker to compare with (SPY by default).
How the backtest works
- Total return: month-end closing prices adjusted for splits, with every dividend reinvested.
- Each month every holding grows with its own return. Monthly additions are split by your weights.
- Rebalancing resets the holdings to their weights at the end of each year or quarter. With “Never”, the winners grow into a bigger share of the portfolio.
- No fees, taxes or trading costs are deducted.
What the numbers mean
| Measure | What it tells you |
|---|---|
| Annual return (CAGR) | The steady yearly return that gives the same result. It is time-weighted, so monthly additions don’t distort it. |
| Volatility | How much the monthly returns swing, as a yearly standard deviation. A stock index fund is often around 15%; a bond fund around 5%. |
| Max drawdown | The largest fall from a high to a later low, measured at month ends. It is the loss you would have had to sit through. |
| Return / volatility | Return per unit of risk. Higher is better; it is a simple form of the Sharpe ratio without the cash rate. |
| Best and worst year | Calendar-year returns. The first and last years are partial and marked with a star. |
Ideas to test
- 60/40: a stock index ETF and a bond ETF, rebalanced yearly, against stocks alone. Compare the drawdowns as well as the returns.
- Adding international stocks or a small-cap fund to a US index fund.
- Your own picks against simply owning SPY.
- Rebalancing: run the same portfolio with yearly, quarterly and no rebalancing.
Limits of backtesting
A backtest shows what happened, not what will happen. A portfolio chosen because it did well in the past often does less well afterwards, and short periods can be dominated by one lucky or unlucky year. Use the longest period the data allows, and look at drawdowns and volatility, not only the return.
To bring a real portfolio back to its target mix, use the rebalancing calculator. To see one holding’s return after inflation, use the real return calculator.
Frequently asked questions
What is a portfolio backtest?
A test of how a mix of investments would have performed in the past, using real historical prices. It shows growth, returns and risk for the period you choose.
Are dividends included?
Yes. The backtest uses total return: prices adjusted for splits with all dividends reinvested on their ex-dividend dates.
Why can't I start earlier?
Every holding needs a price for every month of the test, so the earliest start is the first month of the holding with the shortest history. The note under the results names that holding.
How does rebalancing work?
At the end of each year (or quarter) the calculator sells what has grown above its weight and buys what has fallen below it, so the portfolio returns to your target mix. With Never, the weights drift with the markets.
What is max drawdown?
The biggest fall from a peak to a later low during the test, measured on month-end values. A max drawdown of −35% means the portfolio once lost 35% from its high before recovering.
Does past performance predict future returns?
No. Backtests are useful for understanding risk and how a mix behaves, but future returns can be very different.
Can I put this calculator on my website?
Yes. It is free for any site. Use the embed code generator at the bottom of this page, copy the code and paste it into your page. Please keep the credit line with the two links under the calculator.
Related calculators
- Asset Allocation & Rebalancing CalculatorHow far your portfolio has drifted from its target mix and the trades that bring it back.
- What If I Had Invested CalculatorWhat an investment in any US stock or ETF in any past month would be worth today, vs the S&P 500.
- Stock Return Calculator With DividendsTotal return, price return and the part added by dividends for any stock or ETF between two months.
- DCA vs Lump Sum CalculatorInvesting all at once versus spreading it out, in steady, crash and volatile markets.
See all free investing calculators, or add live stock quotes to your site with the free stock widgets.
Add this calculator to your website
The calculator is free to embed on any website, personal or commercial, and works on WordPress, Blogger, Wix, Squarespace, Webflow, Ghost and plain HTML. Choose the options, copy the code and paste it into your page.
Preview: this is how the calculator and the credit line will look on your page
Free for personal and commercial websites. Please keep the “by Quotelinks” credit line under the calculator visible and unchanged, and don’t modify the calculator or present it as your own. The <script> line is optional: it sizes the frame to fit the calculator; if your platform removes scripts, the calculator still works at the fixed height. Past returns don’t predict future returns. Results are for illustration only, not financial advice.