Average Return Calculator

Calculate Compound Annual Growth Rate (CAGR) and arithmetic average returns for stock portfolios and investments.

Calculator Inputs

$
Beginning balance.
$
Final balance.
yrs
Number of elapsed years.

Calculated Results

Compound Annual Growth Rate (CAGR)
8.45% per Year
Arithmetic Average Return 9.80% per Year
Total Cumulative Return +64.50%
Investment Multiple 1.65x
Values calculate live as you adjust inputs.

About Average Return Calculator

Measures the smoothed annualized compound growth rate (geometric mean) of capital investments.

What is Average Return Calculator?

Measures the smoothed annualized compound growth rate (geometric mean) of capital investments.

How to Use This Calculator

  1. Enter starting portfolio balance.
  2. Enter ending portfolio balance.
  3. Enter holding duration in years.
  4. View true CAGR annualized return and overall capital gain.

The Mathematical Formula & Variables

CAGR = (End Value / Start Value)^(1 / Years) - 1

Step-by-Step Worked Example

Scenario: $10,000 grows to $16,450 over 6 years.

  1. Multiple = 16,450 / 10,000 = 1.645.
  2. 1.645^(1/6) = 1.645^0.1667 = 1.0865.
  3. CAGR = 1.0865 - 1 = 8.65% annualized.

Result: 8.65% CAGR

Frequently Asked Questions

Why is CAGR more accurate than arithmetic average?

Arithmetic averages overestimate returns because a 50% loss requires a 100% gain just to break even, which CAGR accurately reflects.