Free Average Return Calculator: Calculate Geometric Mean & Annualized Investment Returns
Evaluating your investment portfolio's historical performance requires looking beyond simple averages. While adding up annual returns gives a basic snapshot, compound growth (geometric mean) reveals the true growth rate of your money over time.
Using a free online average return calculator allows you to measure both simple average returns and Compound Annual Growth Rate (CAGR) accurately.
Simple Average Return vs. Geometric Mean (CAGR)
When analyzing multi-year returns, understanding the difference between these two metrics is essential:
Simple Average Return: Calculates the arithmetic mean of your annual returns. It provides a quick look at average year-to-year performance but ignores compounding effects.
Geometric Mean (CAGR): Measures the actual rate of return required for an investment to grow from its beginning balance to its final balance, factoring in compounding interest and portfolio fluctuations.
How to Calculate Average Return Online
Determining your historical return metrics takes only a few inputs:
Enter Yearly Returns: Input your annual return percentage for Year 1, Year 2, and Year 3 (e.g., 10%, -5%, 15%).
Add Additional Years: Click to add extra fields if tracking performance across a longer timeframe.
Calculate: View your instant results showing both the simple average annual return and the geometric mean.
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