Average Return Calculator
Enter what an investment was worth at the start, what it is worth at the end and how many years lie between. The calculator returns the compound annual growth rate (CAGR) and the total return. CAGR is the steady yearly rate that turns the starting value into the ending value. If you have a return for each year instead, type the list to get the arithmetic mean, the geometric mean and the total return.
CAGR (Annualized)
12.47%
Total Return
80.00%
How to use the Average Return Calculator
- Enter your numbers in the Average Return Calculator above.
- The result updates as you type, so there is no button to press.
- Change any value to see how the result moves.
The average return formulas
CAGR = (Ending / Beginning)^(1/n) − 1 · · · Total return = (Ending − Beginning) / Beginning · · · Arithmetic mean = (r1 + r2 + … + rn) / n
n is the number of years, and it can be a fraction: 2.5 for two and a half years. CAGR spreads the whole change evenly across those years with compounding. Total return is the change over the full period with no annualizing. Both are shown as percentages to two decimals. The calculator takes values from 0.01 to 1 trillion (an ending value of 0 is a −100% return) and 0.01 to 1,000 years.
Worked example
The fields start at $10,000 growing to $18,000 over 5 years: CAGR = 1.8^(1/5) − 1 = 12.47%, and the total return is 80.00%. Now take $100 that gains 50% in year 1 and loses 50% in year 2, ending at $75. Enter $100, $75 and 2 years: CAGR = (75/100)^(1/2) − 1 = −13.40%, and the total return is −25.00%. A simple average of the two yearly returns would say 0%, which hides the $25 loss.
Frequently asked questions
Why is CAGR lower than the arithmetic mean?
Because losses and gains compound. A −50% year needs a +100% year to break even, so returns that swing up and down grow less over time than steady returns with the same arithmetic mean. The two are equal only when every year has the same return. Type your yearly returns into the list form to see both.
Which average is the right one?
CAGR, when you want to know how fast your money actually grew. The arithmetic mean of yearly returns answers a different question, the return of a typical single year, and it is higher whenever the years differ. The form on start and end values gives CAGR, and the list form gives both.
How do I work out the arithmetic mean of my returns?
Choose "My return for each year" and type one percent for each year. Add them and divide by the number of years: 10, 20, -5 and 8 come to 33, and 33 ÷ 4 is an arithmetic mean of 8.25%. The same four years have a geometric mean of 7.88% and a total return of 35.43%. A comma with a digit right after it, as in 10,5, gets a message, because it could mean 10.5 or two figures.
What if I added or withdrew money along the way?
CAGR here uses only the two values you type, so a deposit counts as gain and a withdrawal as loss. A time-weighted return removes the effect of deposits and withdrawals, and this calculator does not compute one. If your deposits and withdrawals fell at year ends, the IRR calculator on this site takes a cash flow for each year.