Calculate arithmetic and compound (geometric) average returns from yearly results or start and end values.
| Year | Return | Start value | End value |
|---|---|---|---|
| 1 | 12% | $10,000.00 | $11,200.00 |
| 2 | -8% | $11,200.00 | $10,304.00 |
| 3 | 15.5% | $10,304.00 | $11,901.12 |
| 4 | 7% | $11,901.12 | $12,734.20 |
| 5 | 10% | $12,734.20 | $14,007.62 |
The geometric average is the true compound growth rate; the arithmetic average overstates it when returns vary.
Please do not make financial decisions based on these results.
What is the Average Return Calculator?
An average return calculator measures investment performance across several years. The compound (geometric) average reflects what you actually earned; the simple (arithmetic) average does not.
Comparing returns
To judge past performance use the average return calculator and the ROI calculator. For projects with several cash flows, the IRR calculator gives a single comparable rate, and the payback period calculator shows how long it takes to recover the cost.
How to use the Average Return Calculator
- Enter your numbers. Start with Initial investment ($). Use a rate of return you consider realistic; small changes compound into large differences. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Geometric (compound) average return, and the cards below show Arithmetic average, Total return, Ending value. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Average Return Calculator using the default values shown in the calculator above:
Inputs
| Mode | Returns by year |
|---|---|
| Initial investment ($) | 10,000 |
Results
| Geometric (compound) average return | 6.97% |
|---|---|
| Arithmetic average | 7.3% |
| Total return | 40.08% |
| Ending value | $14,007.62 |
| Best year | 15.5% |
| Worst year | -8% |
| Volatility (std. dev.) | 9.09% |
With these inputs the calculator returns Geometric (compound) average return: 6.97%. Change any value in the calculator to see how the result moves.
What the results tell you
The results panel of the Average Return Calculator reports Geometric (compound) average return, arithmetic average, total return, ending value, best year, worst year and volatility (std. dev.). Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Tips for better results
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. Investment returns are not guaranteed. The result shows what the numbers you enter would produce, not what the market will do. It is for information, not financial, tax or legal advice.
Frequently asked questions
Which average should I use?
Use the geometric (compound) average to measure real growth.
What is CAGR?
Compound annual growth rate: the steady yearly rate that would take a starting value to an ending value over the period.
What rate of return should I assume?
There is no guaranteed rate. Test a range of conservative and optimistic rates, and remember that fees and inflation reduce your real return.
Are investment returns guaranteed?
No. Real returns vary. Use these tools to compare scenarios, not to predict results.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
Related investment calculators
- Rate of Return Calculator
- Expected Return Calculator
- Annualized Return Calculator
- Annualized Rate of Return Calculator
- Holding Period Return Calculator
- Real Rate of Return Calculator
- CAGR Calculator (Compound Annual Growth Rate)
- Moving Average Calculator
- Interest Calculator
- IRR Calculator
- ROI & Profit Margin Calculator
- Percentage Return Calculator