Average Return Calculator
Calculate arithmetic average return, geometric average return, CAGR, total return, best year, worst year, volatility estimate, and after-tax return.
Return Details
This average return calculator gives estimates only. Actual investment returns may vary based on market performance, fees, taxes, inflation, timing, and investment risk.
Enter values and click Calculate Average Return.
Return Breakdown
Starting Value$0.00
Investment Gain$0.00
Tax Estimate$0.00
Average Return Summary
| Calculation mode | — |
| Starting value | $0.00 |
| Ending value | $0.00 |
| Investment period | 0 years |
| Arithmetic average return | 0% |
| Geometric average / CAGR | 0% |
| Total return | 0% |
| Status | — |
Average Return Calculator: Understand Investment Performance
Use this guide with the average return calculator above to estimate arithmetic average return, geometric average return, CAGR, total return, after-tax value, inflation-adjusted value, best year, worst year, and return volatility.
What Is an Average Return Calculator?
An average return calculator is a financial tool that estimates how an investment performed over time. It can calculate arithmetic average return, geometric average return, total return, after-tax value, and inflation-adjusted value.
This type of calculator is useful for comparing investment returns, reviewing a portfolio, or understanding how yearly gains and losses affect long-term performance.
How to Use This Average Return Calculator
Enter year-by-year returns or use starting and ending values. Then click calculate to estimate average investment performance.
Choose Calculation Mode
Use annual returns or start/end investment value.
Enter Investment Values
Add starting value, ending value, investment period, or yearly returns.
Add Tax and Inflation
Use optional tax and inflation rates for a more complete estimate.
Review Results
See average return, CAGR, total return, best year, worst year, and volatility.
Average Return and CAGR Formula
Arithmetic average return is the simple average of annual returns:
Geometric average return, also known as CAGR, estimates the compounded annual return over time. CAGR is often more useful when returns vary from year to year.
What This Calculator Shows
This calculator gives a clear view of investment performance using multiple return measures.
Arithmetic Average Return
The simple average of the annual returns entered.
Geometric Average / CAGR
The compounded annual growth rate over the investment period.
Total Return
The overall percentage gain or loss from start to end.
Best and Worst Year
The highest and lowest annual return in the entered data.
After-Tax Value
An estimate of investment value after applying tax to gains.
Inflation-Adjusted Value
An estimate of future value measured in today’s dollars.
Average Return Example
Suppose an investment has annual returns of 8%, -4%, 12%, 6%, and 10%. The arithmetic average adds these returns and divides by five.
The geometric average accounts for compounding, so it can provide a more realistic estimate of long-term investment growth when returns fluctuate.
Arithmetic Average Return vs. Geometric Average Return
Arithmetic average return is simple and easy to understand, but it may overstate performance when returns are volatile. Geometric average return accounts for compounding and is often better for measuring long-term investment growth.
For example, a large loss requires a larger gain to recover. That is why CAGR can be lower than the simple average when returns move up and down over time.
Why Average Return Matters
Average return helps investors compare investments, review performance, and understand how their money may have grown over time. It is useful for stocks, mutual funds, ETFs, portfolios, retirement accounts, and other investments.
Average return is still only one measure. Investors should also consider risk, volatility, fees, taxes, inflation, time horizon, and investment goals.
Average Return Planning Tips
Related Calculators and Trusted Return Resources
Continue planning with related investment calculators and trusted educational resources.
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Open Tool →Learn More From Official Financial Sources
These external resources are provided for educational purposes and open in a new tab.
Rate of Return
Learn what rate of return means for investments.
Visit Investor.gov → SECInvestor Resources
Explore official investor education from the SEC.
Visit SEC → FINRAInvestor Education
Review investment education and investor protection resources.
Visit FINRA → IRSCapital Gains and Losses
Read IRS information about capital gains and losses.
Visit IRS →Frequently Asked Questions
What is an average return calculator?
An average return calculator estimates investment performance using annual returns or starting and ending values.
What is arithmetic average return?
Arithmetic average return is the simple average of a set of annual returns.
What is geometric average return?
Geometric average return measures the compounded annual growth rate over time.
Is CAGR the same as average return?
CAGR is a type of average return that accounts for compounding. It is often different from the arithmetic average return.
Can this calculator predict future returns?
No. It provides estimates only. Actual investment results may vary due to market performance, fees, taxes, inflation, and timing.
Important Disclaimer
This average return calculator is for educational and informational purposes only. It does not provide financial, investment, tax, or legal advice. Investment returns can change, and past performance does not guarantee future results.