fincalculator
Average Return Calculator
Use this free Average Return Calculator to determine the annualized return of your investments. Simple, accurate, and easy to use online.
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INPUT VALUES
Average Return Calculator
The Average Return Calculator determines the annualized growth rate of an investment over a period. It smooths out volatility to give you a single percentage number representing performance.
It supports both Simple Average (arithmetic mean) and Geometric Average (CAGR), with CAGR being the gold standard for measuring investment success.
Why You Need This Tool
- Performance BenchmarkingCompare your portfolio against the S&P 500.
- Volatility SmoothingSee the trend through the noise of market ups and downs.
- True Growth RateIdentify the actual compounding rate you achieved.
The Mathematics Behind It
How to Use This Calculator
Input the percentage return for each year.
Input start value and end value.
Understanding Your Results
Arithmetic Mean
Simple average. Can be misleading for volatile assets.
Geometric Mean (CAGR)
The steady rate that would get you from Start to End. Use this one.
Total Growth
Absolute percentage change.
Common Mistakes to Avoid
- Using Arithmetic Mean: Don't use simple average for investments. If you lose 50% calculate gain 50%, you are not back to even.
Frequently Asked Questions
What is CAGR?
Compound Annual Growth Rate.
Why is CAGR lower?
Volatility acts as a drag on returns. CAGR accounts for this.