The Average Return Calculator finds the annualized, money-weighted return of an investment from its starting and ending balances and any deposits or withdrawals in between.
Average annual return: 11.51%
| Annualized (money-weighted) return | 11.51% |
| Cumulative return | 52.30% |
| Net deposits | $12,900.00 |
| Gain | $5,100.00 |
| Period | 3.86 years |
The average return tells you how fast an investment grew per year. A simple arithmetic average of yearly returns overstates growth when returns vary, so investors prefer the geometric (compound) average, and when money is added or withdrawn along the way, the money-weighted return.
This calculator finds the single yearly rate that, applied to the starting balance and to every deposit and withdrawal from its date, produces exactly the ending balance. This is the same idea as the internal rate of return (XIRR in spreadsheets). It reflects your actual experience, including the timing of your contributions.
Worked example (defaults): $5,600 at the start of 2023, deposits of $5,000 and $3,800, a $1,500 withdrawal, and $18,000 at the end. The money-weighted return is the rate that balances all these flows.
Returns of +50% and −50% average 0% arithmetically, but $100 becomes $150 then $75: a 13.4% yearly loss geometrically. The geometric average is ((1 + r1) × (1 + r2) × …)^(1/n) − 1.
Fund managers report time-weighted returns, which remove the effect of deposits and withdrawals because the manager does not control them. Your personal money-weighted return can be higher or lower depending on whether you added money before good or bad periods.
Why is my return different from the fund's published return? Because of the timing of your deposits.
Can the return be negative? Yes.
What date format should I use? Year-month-day, such as 2024-01-15.