0% annualised (geometric)
—
Simple average (arithmetic)
—
Total cumulative return
—
Years
The geometric (annualised) average reflects compounding and is the more accurate measure of investment performance over time; the arithmetic average simply averages the yearly figures.
Frequently Asked Questions
Why is the geometric average lower than the arithmetic one?
Because gains and losses compound. A +50% then −50% year averages 0% arithmetically but leaves you down 25% — the geometric average captures that real result.
Calculate the simple and annualised (geometric) average of yearly returns.