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\nGeometric Rate of Return Calculator
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Geometric Rate of Return Calculator
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Calculate the geometric rate of return (CAGR) for your investments
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Example
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A beginning balance of $10,000 grows to an ending balance of $15,000 over 5 years. The geometric rate of return is 8.45% per year.
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Formula
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Geometric Rate of Return (CAGR) = (Ending Balance / Beginning Balance)^(1 / Number of Years) – 1
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Related Tools
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| Simple Interest Calculator | Calculate simple interest earned on investments |
| Compound Interest Calculator | Calculate compound interest on investments |
| Future Value Calculator | Calculate future value of investments |
| Present Value Calculator | Calculate present value of future cash flows |
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About This Calculator
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The geometric rate of return calculator computes the compound annual growth rate (CAGR) of an investment over a period of time. It is a useful tool for investors who want to understand the historical performance of their investments and compare different investment options.
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\nWhat is the Geometric Rate of Return? Complete Guide to CAGR
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What is the Geometric Rate of Return?
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The geometric rate of return, also known as the compound annual growth rate (CAGR), is a financial metric used to measure the average annual growth rate of an investment over a period of time. It represents the constant rate of return that would be required for an investment to grow from its beginning balance to its ending balance over the specified number of years. The geometric rate of return is a useful tool for investors who want to understand the historical performance of their investments and compare different investment options.
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The geometric rate of return is a more accurate measure of investment performance than the arithmetic mean return because it accounts for the effects of compounding. The arithmetic mean return does not account for the fact that returns are compounded over time, so it can overstate the actual performance of an investment. The geometric rate of return accounts for the effects of compounding, so it provides a more accurate measure of investment performance.
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Who Should Use This Geometric Rate of Return Calculator?
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This geometric rate of return calculator is useful for a variety of users, including:
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