Average Return Calculator
Calculate arithmetic and geometric average investment returns from annual performance data.
Input Parameters
Results
CAGR - Compound Annual Growth Rate
CAGR smooths out the volatility of year-by-year returns, showing a single steady growth rate that represents the investment's actual performance. It's the best measure for comparing investments over different time periods.
What is the Average Return Calculator?
The Average Return Calculator determines the historical performance of a stock portfolio or mutual fund. It smooths out the volatile ups and downs of the market to provide a single, easy-to-understand annualized percentage.
How It Works (Formula)
The tool uses the Compound Annual Growth Rate (CAGR) formula. A simple arithmetic average is dangerously inaccurate for investments (because losing 50% one year requires a 100% gain the next year just to break even). CAGR solves this by looking only at the start value, end value, and time.
$$ \text{CAGR} = \left( \frac{\text{Ending Value}}{\text{Beginning Value}} \right)^{\frac{1}{n}} - 1 $$
The geometric progression ratio used to measure investment performance.
How to Use It
Enter the value of your portfolio several years ago. Enter the current value of your portfolio today. Input the number of years that have passed. The calculator will output your true annualized return percentage.