Average Annual & Cumulative Returns Calculator - Investment Return Analysis Tool
Average and Cumulative Return Calculator
1. % Year Month
2. % Year Month
3. % Year Month
4. % Year Month
5. % Year Month
6. % Year Month
Investment Performance Summary
Average Return
Cumulative Return
Total Holding Period
Period-by-Period Breakdown
| Starting Balance | Holding Period | Return | Ending Balance |
|---|
📖 How to Use This Calculator
Step-by-Step Instructions:
- Enter Starting Balance: Input your initial investment amount in the "Starting Balance" field.
- Add Investment Periods: For each holding period, enter:
- Return (%): The total return achieved during that period (can be positive or negative)
- Holding Years: Number of full years for this period
- Holding Months: Additional months (0-11) for this period
- Multiple Periods: The calculator allows you to model complex investment scenarios with multiple holding periods, each with different returns and durations.
- Calculate: Click "Calculate Return" to see your results.
- Add More Periods: Use the "Add More" button to include additional investment periods as needed.
Understanding the Results:
- Average Annual Return (CAGR): The Compound Annual Growth Rate represents the mean annual growth rate of your investment over the specified time period, assuming profits are reinvested.
- Cumulative Return: This shows the total percentage gain or loss of your investment over the entire holding period.
- Period-by-Period Breakdown: The table displays how your investment grows through each period, showing the starting balance, holding period, return rate, and ending balance for each phase.
🧮 Mathematical Formulas
Compound Annual Growth Rate (CAGR)
CAGR = ((Ending Value / Beginning Value)^(1/Number of Years)) - 1
Where:
- Ending Value = Final investment value
- Beginning Value = Initial investment amount
- Number of Years = Total holding period in years
Compound Interest Calculation
For each period, the ending balance is calculated using:
A = P(1 + r)^t
Where:
- A = Amount after time t
- P = Principal (starting amount)
- r = Annual interest rate (as decimal)
- t = Time in years
Cumulative Return
Cumulative Return = ((Final Value - Initial Value) / Initial Value) × 100
💡 Key Investment Concepts
Time Value of Money
This calculator demonstrates how money grows over time through compound interest, where returns in each period are reinvested to generate additional returns in subsequent periods.
Risk and Return Relationship
Investment returns are never guaranteed. Higher potential returns typically come with higher risk of loss. This calculator helps model different scenarios but cannot predict actual future performance.
Dollar-Cost Averaging vs. Lump Sum
This tool is designed for analyzing lump-sum investments held over various periods. For dollar-cost averaging strategies, different calculations would be needed.
Government Resources:
- U.S. Securities and Exchange Commission (SEC): Investment Tools & Calculators
- Federal Reserve Economic Education: Understanding Economic Research
- U.S. Department of Labor: Investment Education
- SEC Investor.gov: Saving and Investing
- Federal Trade Commission: Investment-Related Promises
Financial Industry Resources:
- FINRA Investor Education: Investment Calculator Tools
- CFTC SmartCheck: Investment Fraud Prevention
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