Enter a series of annual returns to calculate arithmetic mean, geometric mean (CAGR), median, standard deviation, and simulated portfolio growth.
Calculate the average return on your investment across multiple periods with our free calculator, supporting both arithmetic and geometric (compound) average methods.
Arithmetic Average = sum of period returns ÷ number of periods, a simple average.
Geometric Average (more accurate for compounding investments) = [(1+r1) × (1+r2) × ... × (1+rn)]^(1/n) − 1, which accounts for the compounding effect across periods.
Geometric average accounts for compounding and volatility drag, it's typically lower than arithmetic average when returns vary significantly, and more accurately represents actual compound growth over time.
Geometric average is generally considered more accurate for representing actual investment growth over multiple periods, since it reflects the true compounding effect.
Yes, a simple average doesn't capture volatility, an investment with wildly swinging returns can have the same arithmetic average as a stable one but very different actual outcomes.
Yes, this is a common application, comparing arithmetic vs geometric average returns for a stock or index over multiple years.