Average Return Calculator
Calculate the average (arithmetic mean) return across a series of periodic investment returns.
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Your result
10.40%
Average return
AI explanation
Formula
Average return = sum of period returns / number of periods (arithmetic mean)Worked example
Five years of returns: 12%, 8%, 15%, -3%, 20%
| Field | Value |
|---|---|
| Periodic returns (%) | 12, 8, 15, -3, 20 |
| Average return | 10.4 |
| Number of periods | 5 |
| Lowest return | -3 |
| Highest return | 20 |
Assumptions
- Uses the simple arithmetic mean, which can overstate actual compounded returns when returns are volatile — the geometric mean (CAGR) is more accurate for that purpose.
- Informational only.
Frequently asked questions
Why is arithmetic average different from CAGR?
Arithmetic average simply sums returns and divides by the count. CAGR (geometric mean) accounts for compounding and volatility drag — for the same set of volatile returns, CAGR is always equal to or lower than the arithmetic average.
When is arithmetic average return misleading?
With volatile returns, arithmetic average can significantly overstate your actual compounded growth — e.g. +50% then -50% averages to 0%, but you'd actually be down 25% overall.
Should I use this or CAGR to evaluate an investment?
For evaluating actual realized growth over multiple periods, CAGR (see the Investment Return Calculator) is more accurate. Arithmetic average is useful for simpler statistical summaries.
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Sources
- Mutual Fund Systematic Investment Plans — Securities and Exchange Board of India (SEBI). Effective 01-01-2020, reviewed 13-09-2026.
This calculator provides a general estimate only and does not constitute investment advice.
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