📈 Average Return Calculator
Averaging investment returns is trickier than it looks. The simple arithmetic mean overstates what you actually earned whenever returns bounce around, because losses need disproportionately larger gains to recover. The geometric mean — the constant yearly rate that would have produced the same final wealth — tells the honest story.
Enter each year's return as a percentage, separated by commas. Every value must be greater than -100%, since a total loss cannot be recovered from.
How to use this calculator
Type your yearly returns as percentages separated by commas to get both the arithmetic mean and the geometric mean (CAGR).
- Enter the Annual returns as percentages separated by commas, e.g. 8, 12, -4, 10, 6.
- Make sure every value is greater than -100.
- Press Calculate.
- Compare the arithmetic mean with the geometric mean to see the volatility drag.
Frequently asked questions
What is the difference between the two averages?
The arithmetic mean is the simple average of the yearly percentages. The geometric mean (CAGR) is the constant yearly rate that would have produced the same final wealth. For 8, 12, -4, 10 and 6 percent, the arithmetic mean is 6.40% but the true compounded rate is only 6.25%.
Why is the geometric mean lower?
Losses need disproportionately larger gains to recover: a 50% loss needs a 100% gain to break even. Volatility always drags the compounded result below the simple average.
Why must returns be greater than -100%?
A -100% year wipes the investment out completely, so no average can recover from it. The calculator rejects such values.
How many years can I enter?
At least two, with no upper limit. Just keep the comma-separated format.