Calculate average annual return from account cash flows, or compare arithmetic, weighted, cumulative, and geometric returns from a return series.
Return method mattersAverage return can mean different things
Deposits, withdrawals, compounding, volatility, and holding length can make two "average returns" tell very different stories.
Cash flow method
Starting Balance, Ending Balance, and Activity
Deposits and Withdrawals
Money-weighted annual return0%
Results update automatically as you edit the cash flows.
Net gain$0
Total deposits$0
Total withdrawals$0
Time span0 years
Formula Used
Money-weighted return solves the annual rate that makes all dated cash flows equal zero.
Return series method
Enter Period Returns
Return %YearsWeight
Geometric annual return0%
Geometric return reflects compounding across the entered return periods.
Arithmetic average0%
Weighted average0%
Cumulative return0%
Total years0
Formula Used
Geometric annual return = total growth factor^(1 / total years) - 1.
Return Breakdown
Cash flow rows show how each activity is treated in the return calculation.
Positive Negative
Method
How This Average Return Calculator Works
The cash flow tab estimates a money-weighted annual return. It treats the starting balance as an investment outflow, deposits as additional outflows, withdrawals as inflows, and the ending balance as the final inflow. The calculator then solves for the annual rate that makes the dated cash flows balance.
The return series tab answers a different question. It compares simple arithmetic average return, weighted average return, cumulative return, and geometric annual return. Geometric return is usually more useful when returns compound over time.
Choosing the right number
Average Return Types Explained
Money-weighted return
Best when deposits and withdrawals matter. It reflects the timing and size of investor-controlled cash flows.
Arithmetic average return
Useful for summarizing period returns, but it can overstate the experience of a compounding investment.
Geometric average return
Often better for multi-period investment performance because it reflects compounded growth.
Weighted average return
Useful for portfolio estimates when different assets or periods should not be treated equally.
Average Return Formulas
Geometric annual return = (ending value / starting value)1 / years - 1
Arithmetic average return adds the period returns and divides by the number of returns. Weighted average return multiplies each return by its weight, adds the weighted returns, and divides by total weight.
Money-weighted return is different: it solves for the annual rate that discounts all dated cash flows to zero. This makes it closer to an XIRR-style account return when contributions and withdrawals occur at different dates.
How do I calculate average annual return for an investment account with deposits?
Use the cash flow return tab. Enter the account's starting balance and date, ending balance and date, then list each deposit or withdrawal. The result estimates a money-weighted annual return.
What is an average annual return calculator used for?
It helps turn multi-year investment results into an annualized return figure, making it easier to compare investments with different holding periods.
Is average return the same as CAGR?
No. CAGR is a geometric annual return. A simple average return can be higher than CAGR when returns are volatile because it does not fully capture compounding loss and recovery.
What is the best average return formula for stocks?
For a sequence of stock returns, geometric average return is often more useful for long-term performance. Arithmetic average can still be useful for summarizing one-period returns.
How do I calculate portfolio average return with weights?
Use the return series tab and enter a weight for each return. The weighted average return equals the sum of each return times its weight divided by total weight.
Why does a 50% loss followed by a 50% gain not break even?
A 50% loss turns 100 into 50. A 50% gain on 50 only brings the value to 75. That is why geometric return is usually lower than arithmetic average when returns are volatile.
Can this calculator handle withdrawals?
Yes. In the cash flow tab, set the activity type to Withdrawal. Withdrawals are treated as money coming back to the investor.
What is the difference between time-weighted and money-weighted return?
Money-weighted return is affected by the timing and size of cash flows. Time-weighted return tries to isolate the investment manager's performance from investor deposits and withdrawals.
Can I use this as a mutual fund average return calculator?
Yes, for return math. If you need expense ratios, sales loads, and net IRR after mutual fund fees, use the Mutual Fund Calculator linked above.
Does average return predict future return?
No. Average return summarizes past or assumed numbers. Future investment returns can differ because of valuation, inflation, interest rates, fees, taxes, and market risk.
Disclaimer
This calculator is for general informational purposes and simple arithmetic checks. It is not investment advice, tax advice, legal advice, or a prediction of future performance. Historical or assumed average returns do not guarantee future results. Verify important investment decisions with reliable records and a qualified professional.