Your Net Worth Isn't a Number, It's a Timeline

Why a single snapshot misleads

Consider two investors, both with a portfolio currently worth £500,000.

Investor A has been invested for 8 years, put in £200,000 of savings over that period, and has grown from near-zero to £500,000.

Investor B received a £600,000 inheritance two years ago, invested it, and the portfolio has declined to £500,000.

Both have a "net worth" of £500,000. Their financial situations are completely different. What's missing is the history — the timeline of contributions, withdrawals, valuations, and returns.

What NAV history tells you that today's value doesn't

• Volatility and drawdown: How much has the portfolio fallen from peak to trough? How long did it take to recover? This tells you about risk profile in a way current value never could.
• The contribution effect: How much of the current value is investment returns vs money you put in? A portfolio that grew from £100k to £500k through £380k of additional contributions is fundamentally different from one that grew through compounding.
• The timing of allocation decisions: If you added significantly to equities just before a correction, or moved to cash just before a rally, those decisions show up in the NAV history.

TWR vs IRR: the history question

Both return metrics are historical — they require the full timeline to compute. But there's a subtler point: the comparison between your TWR and your IRR is itself informative.

If your IRR is higher than your TWR, your timing was good — you tended to have more money invested when returns were higher. If your IRR is lower, your timing worked against you. This comparison is only possible with complete historical records.

The private asset complication

For portfolios with illiquid assets, the NAV timeline includes periods where private asset values are held constant between valuation events. Changes in total portfolio value will appear "lumpy" — smooth movement from the liquid portion, then sudden jumps when a valuation is updated.

What this reveals: a portfolio that shows steady growth might be showing that growth because illiquid assets haven't been revalued, not because anything has actually performed well. The timeline makes this visible.

Portfolio value vs accessible value

Most trackers miss the difference between total portfolio value and accessible value — what you could actually access quickly. A portfolio worth £1m consisting of £300k in listed equities, £200k net equity in a mortgaged property, and £300k in a PE fund with 5 years to exit is very different from £1m in a money market fund. Liquidity has a value, and illiquidity has a cost.

Using the timeline for forward planning

The historical timeline is the input to forward planning. Retirement projections require an expected return assumption — the historical timeline informs that assumption. If your portfolio has compounded at 8% net of contributions over the past decade, you have evidence for what your portfolio actually achieves in practice, not a theoretical market return.