Average Return Calculator
Two ways to average investment returns: compute the annualized money-weighted return of an account from its starting balance, ending balance and dated deposits/withdrawals — or combine several returns with different holding periods into cumulative and annualized averages.
TheCalculators — Average Return Calculator
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Average Annual Return (money-weighted)
12.24%
over 3.69 years — the rate that grows the starting balance and dated flows into the ending balance
- Starting Balance
- $5,600.00
- Net Deposits
- $7,300.00
- Total Invested
- $12,900.00
- Ending Balance
- $18,000.00
- Net Gain
- $5,100.00
- Time Elapsed
- 3.69 years
How this was solved
- 1Future-value equationstart×(1+r)^T + Σ flowᵢ×(1+r)^(T−tᵢ) = end balance
- 2Iterative solveSolved r = 12.241% by bisection — the money-weighted (IRR-style) annual return accounting for the timing of every deposit and withdrawal.
- 3NoteUnlike a simple average, larger flows earlier in the period influence the result more (time value of money).
Cash flows used
Most useful next
Formula
Cumulative = Π(1+rᵢ) − 1; Annualized = (1+Cumulative)^(1/years) − 1
Pro tips
- • Use the cash-flow mode for real accounts where deposits and withdrawals happen at different times.
- • Volatility drag: a +50% year followed by −50% leaves you down 25%, not flat.
- • Money-weighted return differs from time-weighted return when you control the flows.
FAQ
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