Avg. Rate of Return

The Average Rate of Return (ARR) is a simple and straightforward metric used to determine the arithmetic mean of the returns an investment has generated over a specific number of periods. It provides a quick look at the typical return of an asset, although it's important to note that it does not account for the effects of compounding and can sometimes be misleading for volatile investments. For a more accurate measure of long-term performance, it is often better to use the Compound Annual Growth Rate (CAGR). However, ARR is still useful for a basic, period-by-period performance summary. To use this calculator, you need to provide a series of periodic returns. These returns should be entered into the text area as percentages, separated by either a comma or a space. You can include both positive and negative returns. For example, if an investment returned 10% in the first year, 12% in the second, and lost 5% in the third, you would enter '10, 12, -5'. Once you have entered all the return values for your chosen periods, click the 'Calculate ARR' button. The tool will then sum up all the individual returns and divide by the number of periods to find the simple arithmetic average. The resulting Average Rate of Return will be displayed as a percentage. This gives you a single number that represents the central tendency of your investment's performance over the observed time frame.