Average Return Calculator

Arithmetic average return is the plain mean of the entered percentages, while geometric average return measures the compounded path they actually produced. When returns are uneven, the arithmetic mean is usually higher because it ignores the compounding damage caused by losses. For multi-period investment growth, the geometric figure is usually the more honest summary.

It uses the same compounding idea as CAGR, but it is derived from a full series of periodic returns rather than just a starting value and ending value. The page multiplies the growth factors together, then annualizes the compounded result using the selected number of periods per year. That makes it a CAGR-style annualized measure for evenly spaced periodic data.

Not reliably. Once money moves in or out of the investment during the measurement window, a simple average-return summary can become misleading. In that case you usually need a money-weighted return or IRR-style method that reflects external cash flows and their timing.

Because losses hurt compounding more than equally sized gains help it. A gain of 50% followed by a loss of 50% does not leave you flat — it leaves you down 25%. The arithmetic average of those two numbers is 0%, but the compounded outcome is negative, which is why the geometric measure is the better guide to actual growth.