Average Return Calculator

Modify the values and click the Calculate button to use

Cumulative Return: 51.78%

Cumulative Return: 51.78%
Average Return: 11.50% per year
Total Holding Period: 3.8333 years
Periods: 3

The average return is the compound annual rate that links the first $100.00 to the final balance.

Return sequence

Holding period	Return	Holding years	Ending balance
1 year, 2 months	10.00%	1.1667	$111.76
5 months	-2.00%	0.4167	$110.82
2 years, 3 months	15.00%	2.25	$151.78

Each row compounds the previous ending balance at the entered annual return for its holding period. The starting value is $100.00.

What this average return calculator does

This calculator combines a sequence of investment returns with different holding periods. For each row, it applies the annual return for the entered number of years and months, then compounds the ending balance into the next row.

The result is the cumulative return over the full sequence and the average annual return that links the starting value to the final balance. It is useful for comparing periods with different lengths without treating a 5-month return the same as a 2-year return.

How to use this calculator

Enter a return for each period.
Enter the holding length in years and months.
Add more rows if needed, or remove rows you do not want to include.
Click Calculate.

The default example starts with $100, earns 10% for 1 year 2 months, loses 2% for 5 months, and earns 15% for 2 years 3 months.

Average return formula

For each row, the ending balance is:

Ending balance = Previous balance × (1 + return)^(years + months / 12)

The cumulative return is:

Cumulative return = Final balance / Starting balance − 1

The average annual return is the compound annual growth rate over the total holding period:

Average return = (1 + Cumulative return)^(1 / Total years) − 1

This is a geometric average, not a simple arithmetic mean. It accounts for the fact that returns compound over time.

What the results include

Cumulative return: the total return across all rows.
Average return: the compound annual return over the combined holding period.
Total holding period: the sum of all row lengths.
Return sequence: each row's holding period, return, holding years, and ending balance.

Assumptions and limitations

The calculator assumes each row's return is an annual rate that compounds over that row's holding period. It does not include taxes, fees, inflation, or cash flows during the period. The cash-flow-based return method on the reference page is not included in this version; use the IRR calculator for dated deposits and withdrawals.

Frequently asked questions

Is the average return the same as the arithmetic mean?

No. This calculator reports a geometric average, which accounts for compounding. The arithmetic mean can overstate the return actually earned over multiple periods.

Why does the holding period matter?

A 10% annual return earned for five months produces less growth than the same rate earned for two years. Converting each row to years and compounding it keeps the sequence consistent.

Can a row have a negative return?

Yes. A return above -100% is allowed. A loss of 100% or more would make the compounded balance zero or negative, so it is rejected.

Does this include deposits or withdrawals?

No. The sequence assumes a single starting balance that compounds through each period. For cash flows, use an IRR or time-weighted return calculation.

Source

References:

Disclaimer

This calculator is for informational purposes only. It is not investment advice. Past returns do not predict future results.

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