Average Return Calculator

A −50% then +50% is NOT flat — it's down 25%. The geometric mean captures that arithmetic averages hide.

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How the Average Return Calculator works

The calculation follows the standard method used across the US — no shortcuts, no hidden assumptions. Here is exactly what happens behind the scenes:

Formula

Geometric = (∏(1+Rᵢ))^(1/n) − 1

Which average matters for investing?

Always geometric (CAGR): it compounds. Arithmetic overstates achievable growth whenever returns vary — more volatility widens the gap.

Volatility drag?

Gap ≈ variance/2. Two funds with equal arithmetic means but different volatility produce different wealth — smoothness is itself a return.