Average Return Calculator
Find your investment's compound annual growth rate (CAGR) and the simple arithmetic average of your yearly returns.
Average Return Calculator
Compound annual growth rate (CAGR)
0%
CAGR = (End / Start)^(1 / Years) − 1. Arithmetic average is the simple mean of entered yearly returns and does not account for compounding.
Example
An investment grows from $10,000 to $20,000 over 10 years.
CAGR = (20,000 / 10,000)^(1/10) − 1 = 2^0.1 − 1 = 7.18% per year. Total growth is 100% (a 2.00x multiple).
For yearly returns of 10%, −5%, 20%, 8%, 15%, the arithmetic average is (10 − 5 + 20 + 8 + 15) / 5 = 48 / 5 = 9.60%.
How it works
Enter a starting value, ending value, and number of years to get CAGR; or paste a list of yearly returns to get their arithmetic average. Both update live as you type.
Good to know
The Average Return Calculator gives you two different ways to express how an investment performed over time. In the first mode you enter a start value, an end value, and the number of years, and it returns the compound annual growth rate (CAGR) along with total growth, the growth multiple, and the year count. In the second mode you paste a comma-separated list of yearly percentage returns and it returns the plain arithmetic average, plus the number of periods, the sum of returns, and the best and worst year. It's useful for investors, students, and anyone comparing funds, portfolios, or single positions across multiple years.
Reach for the CAGR mode when you only know where a balance started and ended and want one smoothed annual rate you can compare against another investment or a benchmark. Use the average-of-yearly-returns mode when you already have a year-by-year track record and want a quick mean, or when you want to see how far a simple average sits above the compounded reality. Running both on the same data is the fastest way to feel the gap that volatility creates.
To interpret the result, treat CAGR as the rate that, if earned every single year with no swings, would carry your start value exactly to your end value. The arithmetic average answers a different question: what a typical year returned on paper, ignoring the order and the compounding of those years. The two numbers will rarely match, and the more your yearly returns bounce around, the further the arithmetic average drifts above the CAGR.
One practical caveat: CAGR here is purely a beginning-to-end measurement, so it ignores any deposits or withdrawals you made along the way. If you added money mid-period, the end value reflects those contributions and the CAGR will overstate the underlying investment performance. For accounts with ongoing cash flows, a money-weighted return measure is the more honest comparison.
Frequently asked questions
What is the difference between CAGR and the arithmetic average return?
CAGR is the single annual rate that compounds your start value to your end value, so it reflects real, smoothed growth. The arithmetic average is just the simple mean of yearly returns and is usually higher because it ignores compounding and the drag of negative years.
Why is my CAGR lower than the average of my yearly returns?
Volatility creates a gap: a 50% loss needs a 100% gain to break even. CAGR (a geometric measure) accounts for that compounding effect, while the arithmetic average does not, so the more your returns swing, the larger CAGR falls below the simple average.
Is my data uploaded anywhere?
No — this calculator runs entirely in your browser; nothing is uploaded.
Is this financial advice?
No. These are educational estimates — consult a qualified financial professional before making decisions.
People also ask
How do I calculate average annual return?
For a smoothed annual rate, use CAGR: divide the ending value by the starting value, raise it to the power of 1 divided by the number of years, and subtract 1. For a simple average, add up each year's percentage return and divide by the number of years.
Should I use CAGR or arithmetic average to report performance?
CAGR is generally preferred for describing realized growth over a multi-year period because it accounts for compounding. The arithmetic average is more common for estimating a single expected future year, though it tends to overstate long-run growth.
What is a good CAGR for an investment?
There is no universal benchmark, since a reasonable CAGR depends on the asset class, time period, and risk taken. Many people compare a holding's CAGR against a broad market index over the same years rather than a fixed target number.
Can CAGR be negative?
Yes. If the ending value is lower than the starting value, the CAGR is negative, indicating the investment lost value at that compounded annual rate over the period.
Does CAGR account for dividends or contributions?
CAGR only uses the starting and ending values, so it captures dividends only if they were reinvested and included in the ending value. It does not separate out or adjust for new contributions or withdrawals made during the period.
What is the difference between CAGR and average annual return for stocks?
Average annual return is usually the arithmetic mean of yearly returns, while CAGR is the geometric mean that reflects compounding. For volatile stocks the arithmetic average will be higher than the CAGR, sometimes substantially.
How is the growth multiple different from total growth?
Total growth is the percentage change from start to end, while the multiple is the ending value divided by the starting value. For example, doubling your money is 100% total growth, which equals a 2.00x multiple.
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