Average Return Calculator

Enter Return Data

Results

Arithmetic Mean Return
0.00%
Geometric Mean Return
0.00%
Time-Weighted Return
0.00%
Dollar-Weighted Return
0.00%

Understanding Investment Returns

Types of Returns

Arithmetic Mean Return

Simple average of returns over multiple periods. Easy to calculate but may overstate long-term returns.

Geometric Mean Return

Considers compounding effects. Better represents actual investment performance over time.

Advanced Metrics

Time-Weighted Return

Eliminates the impact of cash flows. Useful for comparing investment manager performance.

Dollar-Weighted Return

Considers the timing and size of cash flows. Reflects actual investor experience.

When to Use Each Metric

  • Use arithmetic mean for short-term analysis
  • Use geometric mean for long-term performance
  • Use time-weighted return for manager evaluation
  • Use dollar-weighted return for actual returns

Best Practices

  • Consider multiple return metrics
  • Account for risk and volatility
  • Compare returns over similar time periods
  • Include all relevant cash flows