Average Return Calculator
Calculate CAGR, total return, and annualized investment performance
Calculate Investment Returns
Determine your investment's average annual return (CAGR), total return percentage, and average annual growth. Compare investments fairly by accounting for the time period.
Formula
CAGR = (End Value / Start Value)^(1/years) - 1
CAGR (Compound Annual Growth Rate) calculates the average annual growth rate accounting for compounding. It smooths out volatility and shows a steady annual rate that would produce the same result as your actual investment.
Frequently Asked Questions
Related Calculators
When to Use the Average Return Calculator
- Comparing investment performance across different time periods
- Understanding your portfolio's compound annual growth rate (CAGR)
- Evaluating mutual funds, stocks, or other investments
- Benchmarking against market indices and inflation
- Planning retirement based on historical returns
Common Mistakes
- Confusing CAGR with average annual return: CAGR accounts for compounding, while average return divides total return by years. Always use CAGR for multi-year comparisons.
- Ignoring fees and taxes: Reported returns often exclude fees and taxes. Adjust inputs to reflect your actual after-fee returns.
- Using different time periods: Always use the same starting and ending dates for comparing investments fairly.
- Forgetting about negative returns: If your investment decreased, the calculator correctly shows negative returns.
- Not accounting for cash flows: This calculator works best for lump-sum investments. For regular contributions, use a different method.
Formula Explained
CAGR (Compound Annual Growth Rate) uses this formula:
CAGR = (Ending Value / Starting Value)^(1/years) - 1Total return is calculated as: (Ending Value - Starting Value) / Starting Value