Geometric Mean Return Calculator

About this calculator

The geometric mean return, also known as the compound annual growth rate (CAGR), measures the smoothed annual rate of return that would take an investment from its starting value to its ending value over a given number of years, accounting for the compounding effect of returns building on returns. It is calculated as (ending value ÷ starting value) raised to the power of (1 ÷ number of years), minus one.

Unlike a simple arithmetic average of yearly returns, which can badly overstate actual performance when returns are volatile — a 50% gain followed by a 50% loss averages to 0% arithmetically but actually leaves the investor down 25% — the geometric mean correctly reflects what compounding really delivered. This is why CAGR is the standard way investment performance is reported over multi-year periods. This calculator takes a start value, end value, and number of years to compute the true annualized return.