Average Return Calculator
Enter start and end values to find your real return.
Return Details
Compound Annual Growth Rate (CAGR)
CAGR explained
If $1,00,000 grows to $2,00,000 in 5 years, the total return is 100%. The CAGR of about 14.9% is the steady annual rate that compounds to the same result — much lower than 20% per year simple average, because compounding does the heavy lifting.
Average Return FAQ
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Average Return Calculator — CAGR and arithmetic return
There are two common ways to average an investment's return, and they tell different stories. This calculator computes your total return, arithmetic average and the CAGR (geometric average) — the honest measure of annualized performance.
Arithmetic vs geometric (CAGR) average
Arithmetic average adds up yearly returns and divides by years. If a stock gains 50% then loses 50%, the arithmetic average is 0% — but you've actually lost 25%!
CAGR (geometric) multiplies yearly factors and takes the root: (1.5 × 0.5)^(1/2) − 1 = −13.4%. That's the honest number.
For any volatile investment, CAGR is always ≤ arithmetic average. The gap is the 'volatility drag'.
What really matters
Use CAGR for comparing investments and setting expectations.
A fund's 'average annual' 15% is often an arithmetic number — its actual 10-year CAGR may be 12%. Always ask for CAGR.
This calculator converts an initial and final value into both averages so you can see the difference clearly.
How to use this calculator
- Enter the initial investment value.
- Enter the final value.
- Enter the holding period in years.
- Read total return, arithmetic average and CAGR.
Pro tips
- Prefer CAGR whenever a planner quotes 'average returns'.
- Subtract inflation from CAGR to get real growth.
- Verify with the rule of 72: doubling in 6 years ≈ 12% CAGR.